Indian River County Extension Service 1028 20th Pl

Judith Wakefield

Now Is The Time To Organize Your Finances

Many families don’t keep track of their income and expenses. This can easily lead to financial problems. Having a management procedure for planning and evaluating your income and outgo in addition to record keeping goes a long way in having control over spending. Keeping better financial records is a great New Year’s resolution.

The first step is to decide what you want. Are you saving money for retirement? Are you searching for ways to save money to pay off late bills or keep up with this month’s? Do you need to go to the dentist, buy or fix things for your home and family, pay for day care, or train for a better job?

Having a family conference to determine feelings, problems and ideas concerning money can help let family members know about your current financial situation and give them the opportunity to suggest ideas for improvement. It doesn’t have to be all negative. If you decide as a family on your financial goals, this can help everyone work together. Have them decide on three things they want to do or buy in the future - these are long term goals to be worked toward. Let them decide on three things they want now, these are short term goals. Having goals gives a reason to be more careful in spending.

The next step is to prepare a family net worth statement. If you prepare one each year it will provide the picture of whether you are falling further behind or getting ahead. A net worth statement provides the picture of what you own compared to what you owe.

To determine what you own list the following: cash on hand, balance in checking and savings accounts, the market value of your home, other real estate, vehicles and household items, value of any stocks and/or bonds you own, cash value of life insurance (term insurance has no cash value), cash value of retirement savings and any other items of value you own. The total of this is your assets.

Next list what you owe: what is your mortgage (how much do you owe on your home and other real estate), how much do you owe on credit cards or other installment debts, how much do you owe on vehicles? List all your financial obligations. Total your obligations.

Subtract what you owe from what you own and that is your net worth. Net worth is where you are. Where would you like to be a year from now? Perhaps you would like to reduce the debt load you are carrying, increase your savings or buy a major item.

A financial plan will improve your chances of attaining your goals or getting them where you want to be.

The next step is to keep records of exactly where your money is going. It’s easy to spend money without having much to show for it. For at least a month write down everything you spend money on, whether it is cash or a check or putting an expense on a credit card. At the end of the month add up how much was for food, utilities, rent, entertainments, etc.

Do you know how much your total income is each month? Many people don’t, they just go from paycheck to paycheck. Income is in different forms for different people. Some people are paid monthly, some twice a month, and some weekly. Income can be paychecks, pension payments, Social Security, Unemployment checks, Welfare or Aid to Families with Dependent Children, Food Stamps, any money from relatives or income from extra jobs such as babysitting, house cleaning, yard work, tips, etc. The total of all forms of income for the month is your total monthly income. Hopefully it is higher than your total monthly expenses. If it is not, study your record of expenses and determine where changes can be made. This should be a family decision. Cut back on expenses where possible - this may mean eating out less often, taking a lunch to work, cutting back on purchases, etc. Remind the family of what their financial goals were and decide what needs to be done to reach these goals. This may encourage teens to get jobs to provide some of their own wants and needs.

Are you putting money each month into a savings account or other form of savings? It’s important to have some money available for emergencies. It’s also important to be saving money regularly to accomplish family goals.

Use your record of spending and income to prepare a budget. Decide on how much it takes to fulfill the family’s needs for each spending category. The total on the budget should provide for spending and savings both. Put money in savings first, don’t let it be whatever is left over. Payroll deductions for savings in credit unions, etc., are an easy way to save. If you don’t see it you are less likely to spend it.

Try out your budget and keep track of spending and income to see if you can stay on the budget. Eliminate unnecessary expenses. Adjustments in the budget may be necessary. Focusing on your short and long term goals can help rationalize spending less than you are used to.

Stick with your plan one month at a time. Be sure to pay bills on time so you don’t have additional late charges.

For families that have too much debt and can’t work their way out, Consumer Credit Counseling Service can help you pay off debts and learn money management.

Get into the habit of keeping and organizing records. Keep it simple, whatever works for you.

The Indian River County Extension Service has a series of lesson sheets on How to Make a Spending Plan that can help families keep better track of their finances. It can be picked up at the Extension Office (1028 20^th Place - County Administration Annex - Suite D) or mailed for $1 for postage and printing (make checks payable to the IRC 4-H Council).