How can one get smart with their finances? Well, there are many ways, for example, you could cut down expenses by focusing on the basic needs and obliterate every form of luxury for a period of time. Some people find it very hard to tone down their lifestyle; the designer shoes, watches, and bags all come with an expensive price tag that you can avoid if you don’t have your ducks in a row yet.
Households in London have been found to spend a lot of money funding their lifestyle, the North East area of the UK, has been determined to spend the least, thus their yearly spending runs up to £22,000. Whereas, that of London goes up to £34,000 in one year, so what exactly do they spend their money on? You will be surprised that the most important things that consume much of their money is housing and transport.
And when it comes to housing rent tends to be much higher than the mortgage, they also love pets and would spend a huge sum on them. Package holidays are a must for UK residents, gym memberships, cinema trips and lastly hair and beauty products also consume a ton of their money. They sure do eat life with a big spoon, however, it is a vicious cycle because little or no money is saved, and no projects are running except for the mortgage.
How to Manage Money
Sometimes it’s easy to get caught in the upward spiral of luxuries and when you try to get out of it, you lack substantial reasons to get rid of the habits and that is where “how to manage your money worksheets come in.” The sheets aid one in making smart money decisions. The money worksheet is a versatile document and you can use it as your assessment tool to correct your current financial situation.
As you manage your finances there are certain aspects that have to be consolidated, so that tracking becomes easy, for example, your cash flow and your expenses have to run side by side so that you can determine whether some things are worth spending money on. Having a big paycheck and not knowing your net worth only goes to show that you are not managing your finances properly and the reason you need to adopt the manage your money worksheets.
The worksheets, therefore, work from two angles, they will first inform you if your expenses are more than your income, and this is normally indicated by the accumulating debts. The sheet will also let you know what you can afford with regard to the money that you have. A worksheet will also give you a breakdown of your finances, the amount of money that you have and where you should spend it.
There are numerous types of money worksheets that can be adopted and we will sample some of them for you so that you know what to look for and how to use them.
What information is included in a money worksheet?
Don’t fret, there is nothing technical in this part, only some simple calculations and you have to indicate your net worth because this is the only means of measure that show you have progressed within the working year. You will also indicate your essential expenses, this are the sort of things that you cannot do without, such as medical, insurance, school fees, and household expenses.
Your list of unsecured debts should also feature in the money worksheet and here you will input the name of the debt, the lender and the attached interest. You could also indicate the money that you have already paid and the remaining balance. Information on your monthly income should also be included in the worksheet. All your sources should be indicated including the money you are getting from your side business or from work that doesn’t come as salary.
On the worksheet, you will also indicate your financial objectives, this are the things that you want to achieve after saving money. Depending on what you want you will, therefore, set the long term goals that are to be achieved within a period of five years or more, there are also the short term goals that can be achieved within a one year period and the midterm goals achievable within a period of five years.
Finance management does not only have to be done on money worksheets there are applications with essential tools that can help in the management of money. However, right now we will focus on the different types of money worksheets that will help you manage your money effectively.
Types of money worksheets
The Debt Snowball Worksheet
This is a spreadsheet and calculator option that will help you clear your debts starting from the smallest one. The idea is that you clear your small debt in full, not in unison but one after the other as you build momentum. The snowball effect picks as you become consistent and finally reach the big debts thus a big snowball.
You will, therefore, have to adopt the Google or Excel documents to make the process successful and then start by listing your debts, “all of them” from the smallest going upwards. Then indicate the total balance on each of them, you will then pay off the minimum amount of all the debts minus the smallest one, but dedicate yourself to paying the smallest debt in a one-time instalment.
After successfully paying off the first debt reward yourself, and the amount you had dedicated to the first debt will then be moved to the second one and the cycle will continue; don’t forget to reward yourself after every milestone.
The Net Worth Money Management Planner
As you create this type of money worksheet, you will include your assets and liabilities so that you can subtract. You will, therefore, create four columns the first one for the assets, the second one for funds, then the liabilities and their amounts, find their totals, and then subtract from assets.
The idea behind the money calculator is that you will get motivated as the numbers slowly build up.
Planning Future Expenses Worksheet
The worksheet helps in creating a time frame for future acquisitions, and it will, therefore, contain up to four columns, the first one will show what you are already doing in terms of achieving the goals. Also, what you plan to do in the near future, and the big goals that are to be accomplished in a few years and what you aim to achieve in the far future.
The above plan helps to obliterate the chances of you confusing the big purchases with emergencies, for example, if your car breaks down, you will most likely be tempted to buy a new one as an emergency yet it is something that you should have saved for from the past years.
The Poor Man’s Budgeting Worksheet
This type of worksheet is for people who have not been able to stick to their previously created budgets. So here every dollar that comes in is given a task, people who live from paycheck to paycheck will especially benefit from this worksheet.
When you are on a low income there is always that silent voice in your head telling you that your money isn’t enough and you automatically put off investing. So what the saving worksheet does is that it will show you how toxic the delay is in the long run. Thus giving you the motivation to save money.
Personal Capital Retirement Planner
This type of worksheet will calculate for you the amount of time left until you reach financial independence, with regard to your current savings rate.
Health Plan Comparison sheet
Health insurance plans don’t come cheap, it, therefore, becomes a hurdle to acquire one. However, this worksheet will have you change your mind, as it makes everything seem so easy. You will thus input your estimated cost of health care, and remember the amount is subject to deductions. You will then access the cross over point that will show you the importance of a Health Savings Account or a High-Deductible Health Plan (HDHP).
The latter is a health insurance plan that features high deductibles with lower premiums. So if you decide to get covered by HDHP, then you should be prepared to open a health savings account. The worksheet will give the best plan for your future medical needs such as an operation.
Save Early vs Save Late Worksheet
This worksheet is not very different from the personal capital retirement planner. You will, therefore, be informed on the ills of not saving for retirement, Information will also be provided on how much you need to save as regards your pending age, to reach the desired goal.
The money management worksheets above are not conclusive but will help give you a head start in smartly managing your finances. Other money worksheets are the crisis checklist that could cover the death of a parent or a spouse, divorce, natural disaster or identity fraud. There is also the employment plan worksheet and the income and spending worksheet among others.
Does money spending differ with the location of your residence?
Apparently renting a house in London will cost you more than the average rent price across the United Kingdom. People who live in the Humber, Northwest, Yorkshire, and the North East, spend more money on culture and recreation when compared to the Londoners.
Individuals living in Northern Ireland have rarely invested in-home internet when compared to those living in the UK. And in Scotland, about 1.8% is spent money on alcohol, whereas London only features 1.1%. In Wales, individuals living there spend less on eateries than those in London, Low-income earners also, tend to forego a lot of the luxuries when compared to high-income earners.
The low-income earners, therefore, don’t have much to save after settling their bills. However, there is always a way around the toughest of situations, we will, therefore, discuss some of the tips that will put some money in your savings account even on a low income.
Money-saving tips on a low income
Use an application- sticking to your budget can be one of the toughest things to do, but by using one, you will get the motivation to follow through. Besides building societies and banks do have online budgeting tools that will collect information from your transactions.
Free time to manage money- just like you set time to go to a car wash, dedicate some time to evaluate your source of livelihood, this will, in turn, help you stay on top of your expenditure, and even have some money to save.
Budget Review- go through your budget after a few months and see if there are any changes in the spending pattern, there could be an increase in the household bills or you might have gotten a pay rise and haven’t yet designated the extra income.
Save the extra coins – the leftover coins when put together will give you a good sum, by the end of the week many people do have some leftover coins in their pockets. Well don’t let them lie around, collect and put them in a jar.
Look for the best deals– some suppliers offer the best affordable deals when it comes to the internet, bills or phone service. From time to time evaluate your suppliers to see if you are still getting the best deal or need to source for better ones.
Find a side hustle- this should be the gospel for any low-income earner, you could get creative if you have a hobby and make stuff that could be sold for profit, or find an extra job that is not so committing. Open a small business and grow it slowly when you are off work. The options are many including finding online freelancing work such as editing, proofreading or script writing.
Track your expenditure- every item that you use your money on should be documented, no matter how small; this will, in turn, help you identify the items that you can do without that are also not very necessary.
Set a goal- the feeling of achieving a goal can be so satisfying, and the adrenaline rush for saving towards the desired goal is just as thrilling. Therefore, identify an objective and put aside money towards achieving it.
For as long as you live, you don’t stop learning, and spending and saving money is a skill that is not taught in school but you nevertheless need to develop it. To that end, worksheets can be adopted to assist you in managing your finances, whether medical, retirement or net worth. Coming up with a budget and sticking to it is not an option but rather a condition, besides there are applications that can be downloaded to help you with sticking to your budget.