Managing Your Money
Brenda Procter
Personal Financial Planning
Everyone wants enough money to live on. Many people feel they need more.
You can use money to help you get what you want by:
- Making plans
- Following your plans.
- Changing your plans if you need to.
To do this, you must know:
- What you want.
- How much money is coming in.
- How to make a spending plan.
- How you spend your money.
- How to make changes in your spending plan.
- What changes you can make.
Your money can take care of you. It cannot take care of itself. Plan to
make your money take care of you.
What do you want?
What is important to you and your family? Each family must make its own plans.
Let older children share in family planning.
This is a good time to teach older children how to:
- Think and decide what is important.
- Use their time and energy.
- Handle money.
Your plans will work better when everyone pulls together.
First, think what you want to do. This will help you decide how to use your
money.
List the things you want soon and in the future. Find out what each will
cost. Think how you will save for things you want later.
Things you may want or need to do soon:
- Pay all bills.
- Buy or make clothes.
- Buy a piece of furniture.
- Take children to the dentist.
Things you may want in the future:
- A different place to live.
- Education for the children.
- A family trip.
- Money for a "rainy day."
List the things first that you want the most.
Worksheet 1
"Things you and your family want," shows how you might make your
list.
How much money is coming in?
Where do you get your money? Is it from:
- Pay check.
- Pension.
- Farm income.
- Rent.
- Social security.
- Insurance.
- Investments.
- Help from relatives.
- Unemployment, welfare, or aid to children checks.
You may be getting money from only one place. Or maybe you get it from several.
Make a list of where you get your money. You may wish to list this weekly,
twice a month, monthly, or once a year.
List what you make before anything is taken out. Money taken out would be
taxes, insurance, union or other dues, social security, retirement or savings.
List money earned by all members of the family. Be sure to list money earned
by children too.
Worksheet 2
Use "How much money is coming in?," to figure out how much money is
coming in
How to make a spending plan
Use a chart to
figure out how you are spending your money each day. (See the "How you are spending your money each day" chart.) Could you make better
use of your money? A spending plan might help you.
This plan can help you:
- Control your spending.
- Know where your money goes.
Everyone must have some basic things like food, housing and clothing. Look
at your records. See what your family spends on necessities such as these.
This will give you an idea about what future costs will be.
Your records, bills, canceled checks, receipts and whatever else you can
remember will also help you plan.
Now you can see why records can help you. They take the guesswork out of
planning. Study the list you made (Worksheet 1, "Things you and your family
want"). Will some of these things fit into your spending plan?
See where you stand
Move the total amounts spent for each item in Worksheet 3, "How you spend
your money each day" to the last column of Worksheet 4, "Your spending plan."
Compare your spending plan with what you actually spent. How did you come
out?
Do you have money left over? If so, this is fine. You and your family should
be proud of yourselves. Set aside the extra money for the future.
Perhaps you overspent. Many people do. Then the whole family must take another
look at the plan.
Changes you can make
Have you overspent? Remember the important needs, such as food, a place to
live and clothing. Can the costs of these be cut? How much? To cut costs, you
might:
- Buy more carefully.
- Use things to better advantage.
- Avoid quick decisions.
Notice other expenses on your list. What could be left out? What could be
put off until later?
Could you increase the amount of money coming in? Some family members may
be able to take a second job or work at home.
Now decide what changes you will make.
Keeping track
Keep a notebook handy. Use it to write down what you buy each day. Keep all
bills, receipts and business papers together in one place.
Keep older children involved by letting them:
- Pay the bills.
- Help with the paper work.
This will help the family understand where the money goes.
Stop careless spending
All family members old enough to spend money should watch their spending.
Are dollars buying what the family wants most?
Are you spending more than you planned to? Are you spending too much on:
- Daily needs such as food and clothing.
- Rent.
- Transportation -- car or bus.
- Recreation.
Do you have too many:
- Insurance payments.
- Debt payments.
Remember
You can make your money help you have:
- Good health.
- A comfortable home.
- Funds for a "rainy day."
- Recreation.
- Education.
But you must:
- Know what you want.
- Make a spending plan.
- Follow your plan.
- Change the plan if necessary.
Where to get help
Talk with
- County extension, social and public health workers
- Members of church groups
Attend special meetings at the
- YWCA
- Community center
- Recreation center
- Library
Read
- Newspapers
- Magazines
- Bulletins
- Book
This guide was originally written by Edward J. Metzen, College of Human Environmental Sciences, Department of Personal Financial Planning.
GH3830, reviewed January 2007