Making The Most of What You Make

The title is simple: Make The Most of What You Make. Dave Ramsey states in his Total Money Makeover book that most people will have roughly two million dollars pass through their hands in one lifetime. As Ramsey puts it.... why not hang on to some of that? There are simple ways to "hang on" to some of that bundle of money passing through your hands, but it takes something

I call, discipline. Discipline to say "No" while at the grocery store, to say "No" while walking around the mall, to say "No" to that big boat that will put you in debt, or to say "No" to a house you know you cannot afford.

I've practiced discipline in many aspects of my life --money, food, working out, and morality just to name a few. My husband and I have even practiced the discipline of paying off a student loan before interest took control of our lives.

Making the most of what you make includes living within your means, investing, and saving. An easy way to live within your means is to keep an accurate budget. Now keep in mind, this doesn't have to do with how much money you make. You simply add up how much money is coming into your home each month and add up the necessary living expenses which include housing, groceries, gasoline for the car, etc. This part can be crucial when it comes to separating wants from necessities. After you have both sums --income and living expenses-- tweak your budget so that the sum of your living expenses column equals LESS than the sum of your monthly income. Now for some this may mean taking up a second or third job if necessary living expenses continually cost more than you are currently bringing in with your job. Another way to attempt to lower necessary living expenses is to move to an apartment or home you can afford, try couponing, drive less and walk more, lose the gym membership and go running around the block or do exercises while watching television, or even going grocery shopping while you're in a hurry. You'll have less time to wander around the store picking items off the shelf and dropping them into your cart.

We keep our budget sheet on Microsoft Excel. We type in the allocated amount of money for groceries, rent/mortgage, clothes, entertainment, eating out, gasoline, electric/gas bill, and whatever else you intend to include in your budget.

Now here is the trickiest part of the budget.... and it's not even that difficult: keep every single receipt from every item you buy over the month! It makes no difference whether you spend only 50 cents on a candy bar, or $1.00 at McDonald's on a drink, or if you spend $1,000 buying new patio furniture. Write it down or keep the receipt. A friend of mine who teaches finance at a local high school says families should treat their budgets just like a business budget. If you had a business, wouldn't you keep track of every single penny that goes in and out of your company? Well treat your family finances the same way. Keep track of every single penny so you know exactly how much is going in and how much is going out.

At the end of the month, we have a designated day called "Budget Sunday." It's the last Sunday of every month. That day the family sits down and brings every single receipt from the course of the month and we add up the numbers to see how close they come to our original allocated amount. For example, since we have a small family, we allocate $300/month to groceries and many months that number is very tight. If one number is too tight for your family, you can loosen it up, but that means you need to tighten another number somewhere else.

Now, in the next article we will talk about what to do with the left over money after the month's budget is complete. And we hope there is some left over money.... you'll see why soon.