Cleaning Your Personal Finance House

November 9th, 2007 | Posted in Personal Finance

OK, you have let your personal financial situation slide a little…or maybe a lot. It’s time to clean the house but where do you start?

The very first step is to ask yourself some simple questions.

Do you open your bank statements and bills the minute they come in the mail or throw them aside and do a Scarlet O’Hara, “I’ll worry about that tomorrow”? Without looking at your bank balance, can you say within $10.00 what your balance is right now? Do you know what stocks and/or bonds you are invested in? Can you say with certainty how much you spend on gasoline or entertainment in a month?  You do…you don’t…no clue? Yes, you need help and you need to get your financial house in order.

Tip: the Internet can help. There is a mountain of financial information out there on the net and all you have to do is look for it. Use any search engine you like and type in “Personal Financial Help”. Follow those leads until you find programs that can help you get a handle on all things financial. There are a lot of very good ones…some free…some not. Some sites will even help you make a budget you can live with. When you have less income than out-go, making more money isn’t always the answer.

The answer is usually managing the income you have better, more efficiently and wiser. Here are three simple rules to follow:

1. Save first. When you get your paycheck, before you spend one penny on anything else, set aside a few dollars in a savings account. I call that, “Pay Yourself.”
2. Budget your necessities. Necessities are food, clothing, shelter, and transportation… not necessarily in that order. Shelter includes utilities.
3. Subtract #1 and #2 from your total paycheck. The remainder is all you have left for entertainment. Stick to this plan and your financial house will soon be in order.

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