Good evening, my followers, I hope you are just as excited as I am about today blog? So in yesterday blog, I left off with wanting you too take some time and really think about your feeling towards budgeting.
So I also took some so much needed time to think about some question to help you understand your feeling toward budget a little better.
Question one – So here one question that comes to mind today is describing the way my parents managed their finances DID they have a budget?
Well, when I was growing up my father was in control of the money and he started teaching the value of money and simple budgeting until about the age 8 when they told me they were getting a divorce.
After the divorce, my lovely mother decides to take control of the budgeting and this was not a really good idea because soon after she was always worried about the bills and feeding us all. She would get a disconnect notice a lot when I was growing up and she never really talk about the importance of a budget or how to set one up and maintain it. I do not blame her for it because my grandparents never thought her.
How did they talk to you about financial?
Well, I was told no we do not have the money or maybe, here the funny part the maybe never came and we never did talk about money.
Who created the budget?
Younger years my dad had and then my mom took over.
What has been keeping you from making and keeping a budget?
For me, it has been the lack of knowledge and lack of skill and because of this was the reason before the last four years that I had no clue about how to set up the budget or maintain a simple budget.
What is keeping you from looking at your bank statement within the seventy-two hours of getting it in the mail, email, or the online app?
So for me, this was hard to keep up because I was still learning the way of the financial mind because I still lack the skill and management of time. After setting the goals of checking my bank account twice a day or a couple of time a day.
Once you have identified what is truly holding you back from budgeting, it will make learning to manage money a lot easier and moving forward easier. And by be ing able identified what was holding you back will help you be able to determine what you are worth and will guide into making an equity sheet.
So this next part can be confusing as hell and I will do my best to break it down to the most understandable way.
What is your worth?
Equity equals the value of what you own minus what you owe. So by calculating the equity gives you an idea of what you are worth today. So here an example let say you own a $70,000 house , and you owe $20,000 on it, so your equity in the house is $ 50,000.
The next month, your home equity will increase due to the fact that you are paying more of your mortgage.
So for some people fill out an equity sheet gives them a sense of hope which we will talk about in tomorrow blog. In fact, there are also known as “hope sheet” because they are designed to help show you the process you make in paying your debt. I invite you to fill out one for this month. Keep in the back of your mind that your debt is going to seem high and your net worth is going to be low; with a little hard work and effort in a little over six months when you fill out another one, that when you start seeing the difference your net worth will have increased and debt will have decreased.
Equity or a.k.a Hope sheet also come in handy if you are planning on selling something because it makes it easier to reduce debt because it acts as an inventory sheet for all your valuables property.
Do you remember George and Kelley story, the couple that finally decides to sell one of there new cars as the last step to avoid bankruptcy? Their equity personal equity sheet served as a model to use. Remember they when filling out the equity sheet that you need might need to call your mortgage broker to help you determined your debt left on the house, and any jewelry or antiques should be appraised for insurance.
So George and Kelley get their total equity by subtracting the total debt on the cars, the credit cars, and bank loan and let not forget about the debt that is owed on the house. Credit cards and unsecured loans are considered negative equity.
Now, please take the time to fill out your own equity sheet.
When you first start budgeting, fill out the equity sheet once every six months. Then do it once a year after that.
Congratulations now it’s time to take control of your spending by creating the budget.
Step number 1- ” So what is coming in “
The first step in creating your spending plan is knowing what your income will be for the month. So let talk about what some income source included :
1- Take-home pay
2- Money received from bonuses
3- rental property
6- investment interest
9- gifts of money
10- trust funds
Always remember that it is very important to record everything you are expecting to receive this month before the month begins, that way you can plan how you will spend your money. George and Kelley’s parents send them cash gifts for there birthday, anniversaries throughout the years
So this month that they are expecting to receive the cash, they are going to write in it the cash line. That way they will know where they’re spending the money.
George and Kelley Income sources sheet example :
Source Amount Period/ describe
Salary1 $2,316 Kelley take home pay
Salary 2 $ 2,433 George take home pay
Remember that George and Kelley’s salaries are reported in terms of what they there actually bring home this month. So to figure out what you are your take-home pay will take a look at your net pay amount on your last pay stub. That is your take-home pay for the pay period.
If you are paidly then multiply that by four and if you are paid bi-weekly multiply that by two.
If you have irregular income because you are a freelance, or work on commission then you should estimate this month’s take-home pay is based on last year or on the contact you had signed for the year ; then on your income source sheet should be record the amount on the “self-employment ” line stay real in your estimations .
Now I hope that I have explained in term of how to build an income source sheet and I want to encourage on your journey to being a millionaire.