Managing your money.

Do you know where your money goes? Too often, we spend our paychecks without having any idea where the money went. You work hard to earn it. If you take control of how you spend it, you will make better use of your money.

Managing your money means that as your financial needs and goals change, you will have different fixed, variable, and periodic expenses. For example, a person in his or her 20's with a young family may be thinking of buying a house, while a senior citizen may be considering selling one.

When you control how you spend your money, you will be looking beyond how you spend your money at present to how you want to budget for specific future needs. Managing money requires the entire family's participation for you to be successful.

When do you spend your money?

Some purchases you make on a regular basis. Often these are fixed expenses. A mortgage or rent is usually a monthly payment. To be certain you have enough funds, you may find it helpful to set aside a portion of each paycheck. For example, if you are paid each week, you would take one-fourth of the mortgage or rent payment out of each check. On the other hand, many people buy lunch or snacks almost everyday and shop for groceries weekly. These are variable expenses. While you make these purchases regularly, you have some flexibility about how much you spend.

Other payments which only occur on a periodic basis should not catch you by surprise. The bill for car insurance may arrive once every three months or even just twice a year yet it is often a large expense. To prepare for it, you can use the same approach as with your mortgage or rent. Put some money aside from each paycheck. If you deposit this money in a savings account, you will also gain by earning interest until the payment is due.

What are your goals?

If you keep in mind your long term goals, you will be more willing to put aside money in savings to meet them. In addition, if you write down these goals, it will help you save for them. Suppose you want to buy a new car or a house in the future. You will want to set up a separate category in your budget to meet this goal.

What about savings?

To meet your long-term goals, it is important that you include savings in your plan. In all likelihood, you will not have money for a vacation or a new car if you don't anticipate these variable expenses and provide for them in your budget. In addition, there are always emergency situations; for example, you may need emergency automobile repairs. When you make savings a part of your plan, you will have money available when you need it.

Where can you find money to save?

By examing all the ways in which you spend your income, you will have a complete picture of your expenses. Perhaps you didn't notice that you were spending a dollar or two on snacks on a daily basis. While these items may not seem to be a lot of money, over the course of a year, it adds up. What about money you may spend on alcohol, cigarettes, or incidentals at the supermarket? If you can reduce these expenditures, as well as buying other items on special, you save money. Purchasing items on sale whether at the supermarket or the department store can make a difference and help you with your long-term goals.