Where does my money go??
Isn’t it ridiculous? You work you butt off and fill your bank account, only to check a few days later and its all gone – WTH right?!?! Our subconscious works in mysterious ways, and I truly believe that we spend to what we know is in our bank account. I think back to when I was in university, working for minimum wage + tips (and that would have been $8.00/hr!!); we definitely weren’t jet setting across the country, but we had fun! Fast forward 10 years and I’m making WAYYYYY more money and having just as much fun…but with a little more jet setting ;). Regardless of our paystubs, we always managed to make out just fine. Whatever we earned, we seemed to intuitively spend. Every upgrade to our paycheck seemed to upgrade another area of our lives. Rent to mortgage; $500 first car to new car lease; vacation to visit family in Winnipeg to riding rollercoasters in Disney World.
And then I became an “entrepreneur” and I had to re-learn everything I thought I knew about money management. Without a regular paycheck it was a bit more difficult (and stressful!) to have to pay bills, save, and prepare for taxes owing. That’s when I first felt it…that defeated feeling when you open your online banking and realize that the accounts are almost empty. Why?? How??
The OCD money dork in me went into high gear; I had to get back in control. I needed to understand where it all went, so first thing I did was start a Mint account. If you’ve never heard of Mint, it’s a program that hooks up to your bank and credit card accounts so you can monitor it and see where your money goes. I spent a night going back 3 months and categorized everything we spent. It was tedious and seemed to take forever, but I did it, and at the end of it all, there it was…the answer to where we spent our money.
So, what did I do with that? Well, if you know me you can probably guess – I made a spreadsheet ;). It started with a need to make a budget. I know. The idea of budgets sends most people running for the hills – or rolling their eyes. But here’s the thing. You need to be an active advocate for your financial future, and the way to do that is by taking back control. Spending money doesn’t just happen; you make those decisions consciously or not. It’s time to make those decisions informed decisions.
I took the 3 months of spending info and entered it into my spreadsheet, then added in the money coming in and calculated the bottom line. It became pretty obvious then where the money went; and pretty obvious that we needed to adjust our spending decisions. I started with locking in the stuff we couldn’t change (or couldn’t change easily!) – mortgage, loan and lease payments, utility bills, and the like – and then tackled those things we could change easily. You know what those are – meals, groceries, cloths, gifts, entertainment, booze ;), and all the other personal (read: wasteful) spending that you do. I mean we still needed to live, but just maybe not “living it up” as we were. Lastly, I added in savings – it’s that critical piece that we all need in our budgets, that many of us ignore.
I cut what I could, and then I started looking how much more I needed to earn to make the numbers balance. It was motivating to have that minimum target in my sights. To know the clients I needed, the work I needed to bring in, and most importantly the VALUE of all that work. It seriously made me think twice about where and how I was spending those hard-earned dollars!
And so it began. From then on I opened up that spreadsheet a few times a month, entered my spending, and figured out what was over budget and where to cut back the other half of the month. And yes, I still do it to this day!
The ups and downs of running your own business make you think differently. I hope you can take some tips from my experience and help to get your bank account under control. I know I’m supposed to be talking about business stuff here, but let’s face it, our business and personal finances are INTIMATELY intertwined – and trust me – the good habits you build on your personal side will always help on the business side too.
Interested in learning my money methods? EMAIL ME and I’ll let you know all the juicy details!