Financial Friday: A Look At The Past & A Look to the Future

Financial Friday: A Look At The Past & A Look to the Future
by Alice Shaffer



I hope everyone is having a wonderful Christmas and end of the holiday season. I wanted to share four favorite blog posts with you all as well as something new for the future. Of course, it will involve budgeting, but it does including shopping!



Four Blasts from the Past:
Thursday Sept 17: Financial Friday: Step 1: Getting ready to start a budget
Friday Sept. 25:Part 2: Setting up a Monthly Budget
Friday Oct. 9:Part 3: Putting everything in your Spreadsheet
Thursday Oct 22: Where Do I Put My Money?

A Look To The Future:
As you are putting away those Christmas gifts and holiday gifts, you notice who gave you what and remember who you gave to this year. Pull out a small notebook and write down those recipients/givers. This helps you decide on the 2010 gift giving list. Yes I did say 2010 gift giving list!

Many retailers will be marking their Christmas/Holiday items down to 50 & 75% and more starting on Saturday December 26. This is the time to gather the wrapping paper, tissue paper, gift bags, Christmas tree lights, lawn ornaments, and other stocking stuffer type items. It is also a great time to purchase winter clothing for the kids in your life for next winter season. Look for Baby's First Christmas items for those friends and family who are expecting a child in 2010. Holiday shirts, sweaters and other festive wear is on sale for next year.

Last year on December 26th, I went to Target and purchased holiday ornaments that were originally 15 dollars a piece for 75% off. I purchased 6 Mr. Potato Head Santas for about 89 cents each(regularly$6.99) and 12 mini Christmas tree Magna Doodles for 37 cents each (regularly $4.99). I spent $9.78 on items that I gave to National Center for Children & Families for their homeless shelter Santa Shop. This Shop allows parents to get Christmas gifts for their kids. I purchased one of the 60 gallon totes from Sterilite at Target and put all my charity donations in it for this. This year I will be looking for hats, gloves, scarves, books for older kids, board games, among the stocking stuffer type items. Give yourself $20 to purchase Charity items for 2010.

Next week look for 10 Things for 2010!

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Part 3: Putting everything in your Spreadsheet

Part 1: Getting ready to start a budget
Part 2: Setting up a monthly budget

We have finally reached the fun part of our budget-putting it together in a spreadsheet! This is where the fun happens. Putting everything in the spreadsheet and watching your debts go down monthly along with your expenses being paid regularly and on time.

Here is what your spreadsheet might end up looking like if you are a live in professional nanny. If you are a live out professional nanny you might have additional items such as rent, utilities, and car expenses etc. Those expenses can easily be added to your budget spreadsheet.

(Click on the picture to enlarge it-you will need to do this to figure out the next steps)

This is an example of my budget (alias numbers/names).

The column (A) names my expenses and column (B) shows the payment due. Column (C) shows the accumulated total of those expenses due. Column (D) is the due date for these expenses. These are fixed for me. You may have some flexible expenses. Cash is my monthly allowance to use on those items that are not fixed like gas, eating out, clothes, and anything else not written on this budget.

Row 14-C shows my monthly total of $910 for expenses a month. There is a formula for this that automatically figures out the addition for you :)


The column (E) is my debt-credit cards. There are three credit cards on this budget. Column (F) is the balance of the debt. Column (G) is the minimum amount due. Column (H) is the amount of money I am paying towards these items to pay the debt down faster. This will vary based on how much money you have left over a month after subtracting your flexible/fixed expenses from your income. I will share in the coming weeks how to determine which credit card to pay down first via Bankrate.

F-5 is the total debt of credit cards
G-5 is the total minimum due monthly for my credit cards.
H-5 is the total amount of money I pay on my credit cards monthly.
H-17 is the minimum amount needed monthly to pay your credit card debt and expenses
I-17 is the minimum amount you need for 3 months worth of your expenses/debts.
L2-9 is the names of my checking, money market, IRA and savings accounts
M2-9 is the balances of those accounts. This is helpful when figuring out where your money is.
P-Q shows the dates of my paychecks and the amount received on my paychecks.

You may notice several color cells on the spreadsheet. It is color coded according to my 3 banks and what money for debts come out of what account.
Green is Fidelity Credit Card
Blue is LGCU Credit Union
Gold is Wachovia

I have 3 items that are paid on my Fidelity Credit Card monthly because I receive cash back awards for using that account. I then transfer 5000 points to $75 to my Fidelity IRA account. I allow my money to work for me. I get rewarded for paying my bills for my retirement. The items in blue for my Credit Union are auto drafted from my checking account. My paycheck is direct deposited every two weeks on Friday. The gold items come from my Wachovia checking account. This is my account that basically is my "allowance" account. It is a seperate account from my expenses/bill checking account. I have found this has been working very well for me as it seperates my money. Every two weeks I write a check to myself from the Credit Union to Wachovia for my "allowance" When the money is gone in that account, the money is gone.

I hope this gives you an idea of how to set up an excel spreadsheet of your budget. If you do not own Excel you can go to Microsoft Office Live Workshop and set up an account there. Then if you email me at thefinancialnanny (at) gmail (dot) com with the names of your expenses/debts I can fill it in for you and share it with you via MS Office Live Workshop. Then you can enter your amounts of everything. You can also use Google Documents to make a spreadsheet as well. I will be happy to help you with formulas or setting up the columns if you run across problems.

You should revisit your budget monthly. This way you can make sure you are staying on task for your budgeting. This way you can see your monthly debt going down versus staying the same.

Up next week: Where do you put that money for expenses that is due quarterly or bi-monthly.

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Part 2: Setting up a Monthly Budget

I left you with some homework last week. To gather all the bills and income you have as well as writing down all the money you spend. Did you do it? If you did not-then work on it this week! If you did-awesome you can move on to step 2 in the process of making a budget.

I hope that you have gathered all your other expenses as well in your notebook.

This week we are focusing on your fixed expenses and flexible expenses. I have prepared a spreadsheet for you to enter your info into. This is on Google documents called Monthly Expenses. This is where your expenses from the past week go. You should be able to edit it and copy it into your own google documents account via gmail. If that doesn't work, let me know and I will try to help you another way.

1. Fixed Expenses: figure out from your list of expenses what is fixed. Rent, car insurance, cell phone bill, membership dues, etc. These are the items that don't change in amount due. Add these items up.

2. Flexible Expenses figure out from your expenses how much you spend weekly on flexible expenses: gas, groceries, clothes, eating out, entertainment etc. Tally up these expenses. You can then multiply this by four to get your monthly flexible expenses.

3. What is your monthly income after taxes? Include part time work if you earn that regularly a month.

4. Do your fixed expenses and flexible expenses cost more than your monthly income?

If your flexible/fixed expenses are more than your income, you need to work on cutting out some of your flexible expenses so that you have movement in your budget without drowning in further debt.

Next time we will put everything into a spreadsheet.

Remember to let me know if you are working along with the steps so that you are eligable for a giveaway. You must comment on the blog to be eligable.

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Financial Friday: Step 1: Getting ready to start a budget

As I have mentioned, being a professional live in nanny has wonderful benefits and sometimes a downfall of falling into debt. I have been working with a budget lately and wanted to help others set one up so they can be as financially responsible.

Over the coming weeks, I am going to share with you how to set up a budget along with weekly homework assignments that help you get to the next step in making a budget.

This week we will gather money totals for everything - money coming in and money going out. I suggest getting a one subject notebook for your budget and keeping things together. We will eventually put the budget on a spreadsheet so that it will do the calculating for you.

Here’s what you need to get started:

For all of the following you need the amount due, payment due date, amount of loan/balances of accounts, and interest rates

1. Your last paycheck (preferably two) and a schedule of when you get paid (weekly, bi-weekly, bi-monthly, etc) with dates


2. Credit card bills (most recent)- Visa, Mastercard, Sears, Discover, Kohl's - all of them


3. Banking information - this includes checking, savings, money market, CDs, Savings Bonds including fees.


4. IRA/401K/Brokerage account balances and information


5. Insurance paperwork - car, life, health, pet, home/renter's, etc.


6. Utilities –phone, cell, internet, cable/satellite, electric, rent, water/sewer, trash, and appliances etc


7. Student loans or other personal loans


8. Prescription & health care costs


9. Subscription/Membership fees - Health club dues/fees, Netflix, union dues, etc


10. Doctor/dentist visits


11. Daily living:
    Groceries, clothing, eating out, dry cleaning, salon/spa services, gas, snacks, bus/metro/subway/cab fares, movie rentals, concerts, purchase of music/DVDs/books/toys/birthday presents, pet supplies, magazine & newspaper subscriptions,


12. Yearly/Semi Yearly expenses: car insurance, organization membership fees, conference fees, hotel fees, vacation, tuition, music/language lessons, charitable donations


13. anything else that you pay for or collect interest on
    
    This is a large list of items to work on. I promise you that when we get this budget together, you will feel great about yourself.
    

Homework

In addition, to gathering the

above information I would like for you to track ALL of your EXPENSES for this week. You can carry an index card and write down all cash/credit/debit purchases or write them in a notebook. This will help us figure out where you money goes and what kind of budget you need to work with.

Feel free to ask if you have any questions. Let me know if you are going to work on a budget along with me - there might be a special giveaway at the end of all these homework assignments.

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