Setting up a personal finance worksheet does not take a degree in accountancy to produce. It is very simple to achieve, and by following the guidelines below, you will be up and running in next to no time. All you will need is either an A4 sized blank book or a computerised spreadsheet like Microsoft Excel.
The financial statement.
Learn exactly how much money you have coming into your household. On your first page make a list of all the sources of income you have. These will include wages, benefits, etc. Once you have the compiled the list, simply add them all together to find out what your total income is and write this figure on the line below your last income item.
How much money are you paying out for essentials? These items will include things like your mortgage/rent, electric bill, gas bill, water rates, council tax, food allowance, petrol allowance, insurance premiums, etc. List all these items on the opposite page of your income calculations.
It is also a great idea to have a further column that shows the date that each payment is due to be made; it will help you to remember to pay those creditors and not incur excessive charges due to non payment. Again, add together all the values of expenditure and enter the figure on the line below your last item listed.
You now have the majority of the work done. The figures you have calculated will now tell you exactly where you stand financially. At this point, subtract your total expenditure from the total income. Hopefully you will be looking at a positive value being left each month. If it’s a negative value, you will have to look for ways to either reduce your outgoings or increase your earnings. The positive sum is the amount of cash you have left for non essential purchases or luxury items, and of course for adding to a savings fund.
Budgeting.
You should never spend all of your excess income within the month. This is very poor money management. What if your car breaks down unforeseeably? You will need to have some savings set aside to pay the repair bill. I would suggest setting yourself a spending budget for non essential items and list it on your worksheet so you can remind yourself of exactly how much you can spend. Remember once you have spent up to your limit, that’s the lot. Do not dip into your savings fund just to buy something like a magazine, etc.
For those who are always wondering exactly where their money goes each month, the personal finances worksheet can help. On a fresh page you will be able to start a spending diary. Some people like to keep a daily diary. This gives total control of ones spending habits. Every time a sum of money leaves your hand or bank account, (even for a direct debit); add it to your list of spending. Start by entering the date at the top of the page, this will help you to look back at a later date and know exactly when and where you spent money on a particular item. Further along the line from the date, enter the amount of funds available to you. You can get this figure from your bank account, online or most cash machines offer this service. Each time you spend money, list it in the diary. Enter a description of the product or services bought and how much it cost. Build this list up over the week then add up all the expenses to see the true cost of your spending habits.
It is important to remember, every time you spend or pay money out you will need to adjust the total money you have left in your bank account. This will help you to refrain from spending more than you earn and put a stop to those bank charges for unauthorised overdrawing of your bank account which the banks love because they are making money for very little work.
Your personal finances worksheet will assist you in the day to day running of your home finances. Managing your personal finances in this way will benefit you no end. You will feel richer because you have allocated yourself a spending budget, kept track and met all of your financial commitments and even started to save a little money aside for a rainy day.