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How Much Money Do You Save?
We make tons of assumptions when it comes to our finances. Just because the economy is struggling
to stay afloat, doesn't necessarily mean that your personal financial situation is in trouble. On the other hand, some people think
that nothing bad can happen to their finances, until they examine how much money they are saving each month and realize that they
don't have enough money to retire! The bottom line is that you need to be aware of every angle of your finances - you need to
know how much money is in your 401(k), IRAs, saving and checking accounts, investment accounts, 529 Plans, ESAs (Educational Savings
Accounts), etc.
Consider this: You’re renting an apartment and would like to upgrade to a slightly larger unit.
It will cost you an extra $400 per month in rent if you move to the bigger apartment. You figure an extra $400 a month
is not that big of a deal. You then decide to move to the bigger apartment and after a few months, you realize that you can't afford
the extra $400 and it was a huge mistake to move. You should have examined your finances prior to the move to find out whether or
not you could afford the extra $400 per month – this would have saved you a lot of trouble and anxiety. When we're uninformed
about our finances, we are more likely to make mistakes. That’s why you need to know everything about your money. Here's
how to accomplish that:
We all know how much the big expenses (mortgage/rent, utilities, cell phone bill, groceries and
the cable bill) cost. However, the small, day-to-day expenses are the ones that slip under the radar. At then end of the
month, when you’re looking through your expenses, you may not remember that 3 weeks ago, you went into the store to buy a pack of
gum and a magazine! These small expenses add up and you need to account for them. Keep all of your receipts and at the
end of each month, add up all your expenses. Go through each bill and write all of the amounts down – stay organized! Use
our Expense Calculator to help you determine exactly, to the penny, how much money (if any!) you save each month.
Going back
to our apartment example from above, if you had determined before you moved, exactly how much money you save each month, then you
would have realized that moving to a larger apartment was not an option. In other words, how do you know if you can afford something
or not if you don’t know how much money you spend and save each month?
After going through your expenses, maybe you’ll
be surprised and find out that you’re saving plenty of money and you can afford to move to a larger apartment! It’s all about
knowing the facts!
