You are probably thinking romantic thoughts about now. Well, I am sorry but as a credit risk assessment planner, the little things that matter are the habitual latte everyday, the sandwich with the extra mayo from the deli instead of a sack lunch from home. A trip through the car wash instead of using a bucket and garden hose. These little things DO make a difference in money management.
You have in this lesson formulas that will help you know exactly how little is too much. You need to figure out how much you’re spending on the big things too. So get out some paper, and at the top, write down your total monthly income after taxes.
Next write down what you spent on every bill this month including loans and credit cards. Divide each number into your income to determine the percentage you are spending for each expense (Example: You spend $725 on rent and make $2400 per month: 725/2400= 30%).
Now, if you would compare your percentages to what experts recommend, you will know if you are on the right track managing your money, or if the little things have gotten to big for your income:
- Your base rent (not including utilities) should account for about 30% of your income.
- 5% should be set aside for your emergency fund, which has a goal amount of 6 times your take home pay.
- 10% should be spent on utilities and other necessary living staples, such as cleaning supplies and toilet paper.
- Student loans should account for 8% of your income.
- Credit cards, car payments and any other personal loans should come in between 10 and 20% of your income.
- Car insurance (or if you don’t drive, your transportation costs) should account for 15%.
- 8% should go toward clothing and similar items.
- Food expenses (including eating out) should be no more than 18% of your income.
- You can spend up to 5% on recreation and entertainment.
- 10% goes into long term savings such as a house, college, relocating, or retirement.
Tracking your money is an essential but major pain. By being conscience of every penny of your spending, you will also become very aware of your decisions. You can take control of all the little things that add up to big amounts over a month’s time. Stop running over your minutes on your cell phone. Stop all the extras channels you currently have on your tv that is not being watched. Trade or barter your gym membership for walks around the block. These little things ad up over a months time and can be saved to add up to a large deposit on the principle of your debt.
Contact Spectrum Resources for more formulas that will help you structure a plan that is designed just for you. Spectrum Resources counsels in debt, credit and home ownership and we can help you.
Call ( 863) 967-0660 or Email: SpectrumResources@tampabay.rr.comand visit all our blogs for lessons that pay you: http://MoneySavingTips.PolkVoice.com and http://SpectrumRersources.wordpress.com and http://FinancialEducationAndOptions.blogspot.com
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