Am I spending my entire salary??

[onemorepost]

I don't make all that much money a year! It's going to be one year since I was hired at this job. I hardly have anything in my bank account. Am I really spending away my salary?

Does anyone have any suggestions creating a budget? I use excel.

I'm too much of a spender.

Thanks.

[greenskeeper]

write down all income and expenses for one month and see where your money is going.

[disneysteve]

I agree with greenskeeper. The first step is to figure out where your money is going. There are apps and computer programs and such but I think the best way is old school - paper and pencil. Pick up a little notepad that fits in your pocket. For the next month, write down every penny you spend on absolutely anything from a car payment to groceries to a candy bar to the electric bill to whatever.

At the end of the month, sit down and review your expenditures. Copy them over onto a new list with one page for NEEDS and one page for WANTS. That will really help clarify where things are going and what could be trimmed or cut.

The next step is to also look at non-monthly but recurring expenses. For example, you might only pay for auto insurance every 6 months. You need to make sure that each month 1/6 of that amount is set aside in savings so that you're ready when the bill comes.

The ultimate key is to pay yourself first, meaning take money off the top for savings and then live on the remainder. Don't spend what's coming in with the intent of saving what's left because there will never be anything left.

A very good and broad budget plan is 50/30/20. That is 50% for needs, 30% for wants, and 20% for savings. If you can get your spending in line with that, you'll be in great shape going forward.

If you'd like more specific advice, the more info you're willing to provide about your income and expenses, the better we can help.

[sv2007]

Talk to a financial advisor.
In your case, the $400-600 initial cost should pay back many times and fast too.

[Gailete]

Obviously you are spending all your pay, or perhaps more correctly, you are wasting some of your money. You really do need to track where the money goes each day for at least a month and look at what you pay for insurance, utilities, etc. so you have a clear picture.

I don't know how much you are making and how many people you are supporting, but you need to know what your TAKE HOME pay is. It doesn't matter what your gross pay is, it is what comes home with you after taxes, SS, and anything else that comes out of your check (hopefully you have some going into retirement also). It is easy to get into a trap of thinking you make $50K a year, but when push comes to shove you may only be bringing home $35K/year. If you brain is constantly telling you that you can afford something since you make $50K a year, you have to wise up because you don't and never did have that much to spend. You only get $35K (or fill in your own blanks) and from there you have to figure out how to handle all your financial needs. That may take a lot of determining what is a want and what is a need.

My ex-husband used to tell people all the time that he made $800/week, Yeah right. He made that much 2-3 weeks out of the year. But his brain insisted on that amount and he spent like he was bringing home that amount. In reality because he took cash advances on his check (he was a trucker), he might have a take home pay of $200-300/week. A big difference between 800 a week!

So know what you make and know what your take home is, pay your bills promptly and budget savings both retirement and emergency cash as part of your budget.

[Fishindude77]

My buddy's dad always said "pay yourself first" when you get your paycheck.
Meaning, put 10% or so aside in savings that won't be touched. Bill payment and all other spending come out of the remaining 90%, so you need to be able to live on that 90%.

[thestrongprofessional]

Automating your finances

I agree with Fishindude77. Setting aside money as soon as your paycheck comes in is crucial to building long term wealth. Start by saving at least 10% each month to ensure that you have savings to invest in the future.

The first step is to set up a savings account. You can search "best savings accounts" online to find the one that's right for you. Once you've opened your account you need to set up an AUTOMATIC TRANSFER from your checking account to your savings account each month. The transfer date should be the same day you get paid each month. It's important that the transfer is automatic because otherwise it will become too much of a hassle and your saving will slow. After the money has been set aside, make a commitment to not touch this account and live on the money you have remaining.

If you use 10% of your income as your starting point, I promise you'll barely notice a difference. Once you start seeing your savings account grow, you'll get excited about your progress and will feel compelled to save more. This will build momentum and before you know it you'll have a sizable savings account.

I believe in you bud. Take the first step to make your dreams of financial independence a reality.

Raphael
[link removed by moderator]

[onemorepost]

Thanks for the responses. I can't believe I spent almost my entire salary!!!

[snafu]

Wonderful suggestions! One more, avoid spending on small things imposed that are easily avoided. For example, how much has been removed from your account in Banking fees January - December 2016? Consider using a Credit Union, doing transactions on-line since they have limited ATMs. Understand their loan system and benefits.
Do you have a column in your Excel for interest charged on any debt like car payments, credit card(s), Student Loans?
With year end fast approaching, I suggest writing some financial goals for 2017 that are achievable with minor effort - like
'I will pay myself first by automatically moving $ 10% of all pays and any other monies from any other source [gifts, bonus etc] '
'I will plan spending, being mindful of 20/50/30 utilization of take-home'
...know where the money goes

[bjl584]

I definitely agree that you should start tracking ALL of your spending. Down to the penny.

You realized that you have a problem, and that is a huge first step. Now it is time to dive into the details and see exactly where your money is going. Then you can work on creating a solution to get out of this mess.

I see that your original post was about 3 weeks ago. Have you made any progress or any changes to your behavior yet?

[GoodSteward]

My first piece of advice is to write down all monthly bills plus gas, food, and household, and then put in a month of checks and see what is left. if you are paid weekly, just do 4 checks. If you are paid bi-weekly, do two. Do NOT do a year divided by 12. That will give you a skewed number(too high) based on what actually comes in to budget every month. Some months will have more because of how pay periods work, but right now you just need to focus on what is a normal month.

Tracking expenses is also needed, but I recommend starting with finding out what you have to work with after month to month expenses are figured in. People who don't budget often think they have more money left after bills to use than they really do, so they overspend every time.

[scfr]

I see that your original post was about 3 weeks ago. Have you made any progress or any changes to your behavior yet?

I'm also wondering what progress had been made and if there are any follow-up questions.