In this article we're going to discuss money management and how it applies to paying bills. A lot of people might think that money management and paying bills is a contradiction in terms, and in a sense it is. The truth is, if you have a bill that has to be paid then it has to be paid, money or not. However, having said that, there are things you can do with managing your money to give yourself the best chance of paying those bills. It just takes a little bit of thought and a lot of discipline. To start with, if you have a steady job that is half the battle right there. Good salary or bad, at least you know each month what you're going to be bringing home. From there it's simply a matter of making a list of your constant expenses such as rent or mortgage. Those are the things that don't change from month to month, at least until your lease expires and the landlord raises your rent or there's not enough escrow to cover your taxes and your fixed rate mortgage suddenly goes up a hundred bucks a month. The best way to illustrate how to do this is with a fictional example. Let's say your monthly salary is $3000 after taxes. That's what you bring home. That's what you have to spend. A certain portion of that goes for what we call fixed expenses. Those are things that you have no choice but to pay for each month. To simplify this, let's say these are the items that you must pay each month. Rent - $700 Telephone - $50 Gas and Electric - $100 Insurance Payments - $200 That gives us a fixed expense of $1050. Then we have what we call semi fixed expenses. These are items that we have to pay each month but what we pay is really within our control to some extent. These include... Gas For Car - $80 Groceries - $320 Total semi fixed expense of $400 a month. So now are expenses are up to $1450 a month that we pretty much can't get away from. Then we have our variable expenses. These are mostly the things that we really don't need but want, like entertainment and this covers everything from buying CDs and comics to your cable TV and magazine subscriptions. This is where real money management comes in. See, this is where you have to look at how much you have left, determine what you want to save from that each month (you do want to save right)? and what's left is what you have for your fun and games. Now, if you have a lot of money left over, like in this case, then most likely you don't have to think about your little pleasures. But let's say all you have left over after your regular expenses is $200 for the whole month. That comes out to about $15 a day. Guess what? That's how you manage your money. You take $15 out of your drawer every day and put it in your wallet or purse. You have that much money to spend on day one of the month. Don't spend any of it? Then the next day you'll have $30 to spend when you add your next $15. If you do this each day you will find that when the month ends there will be no way that you will have spent more than you have. Naturally things happen. Repairs and unexpected items pop up. But by keeping a tight lid on things and not going out and blowing $150 on a dinner for two at the most expensive restaurant in town (as nice as that sounds) you give yourself the best chance of getting through your month and actually putting away a few bucks in the bank. See, you really can manage your money and pay the bills at the same time. |
