Part 1 in a 3 Part series (1, 2, 3)
Beginning a job search is an excellent time to begin thinking
about the role of money in your life. You may be looking for a job that pays
more or that offers better benefits. By examining how you make and spend money
now, you can develop more reasonable expectations for what you need to earn
in the future.
What role does money play in your life?
Consider the role of money in your life before you jump
into the job search. Although money buys us the things we want and need, it
can also cause a lot of misery. Most people carry too much debt and put too
little money aside in savings. The good news is, it's possible to turn this
around. All it takes is some time and commitment.
Unfortunately, many people let money rule their lives.
This may seem unavoidable, but there are many things you
can do to change this situation. Just looking carefully at what you make,
what you spend and what you save is the first step toward managing your money.
Look at more than the wage or salary.
Many people jump into a job search driven by one thing:
the desire to make more money. This is understandable, but it's also a recipe
for disaster. By only looking at an hourly wage or salary, people overlook
many of the other aspects of work such as benefits and transportation costs.
Your personal finances can help or hurt your job search.
Being informed about your financial goals can help you
make better decisions about salary and benefits. However, your finances can
also hurt your chances for a new job. Some employers are unwilling to hire
someone with a great deal of debt or a bad credit rating. Either way, it always
pays to be aware.
Budgeting is one of the best ways to manage your finances.
First, figure out where your money comes from and where
it goes. Next look for areas where you can trim expenses and save money. Live
with the budget for a while and keep track of every change in income or spending.
Finally, use this information to reevaluate your financial situation, and
see what (if any) changes you need to make.
The 7 Steps of Budgeting
1. Discuss Values
Identify your goals. Think carefully about what you want as opposed to what
you need.
2. Set Goals
Try to formulate some goals for your personal or family
finances. Is your goal to pay off your credit card debt, or to save for a
family trip? This is where you really need to think about what you want and
what you need. Remember, it's always cheaper in the end to save money for
something you want rather than to buy it on credit.
3. Determine Income
Write
down all of your income sources. This includes all the money that you have
coming in each month. The worksheet at the end of this section will help you
compute this figure.
4. Determine Expenses
Every single cent you spend counts as an expense--food,
gas, candy, debt, rent or car payment. Try to keep track of every dollar you
spend--even a cheap snack adds up.
The $11,000 snack!!!
A daily junk food snack really adds up!
Imagine that you eat the same snack every day for 15 years
$.95 Twinkie twin pack
$.69 Bag of chips
$.60 can of soda
= $2.24 a day
= 11.20 a week
= $44.80 a month
= $537.60 a year
over 15 years equals =$8064.00
But, if you had put that money in a 4% interest savings account, it would
be worth: $11,195.
Now that is one expensive snack!!
5. Create a Plan
Look at your expenses and try to figure out where you
can save money. If your groceries seem too expensive, are you using coupons?
Is there a way to cut out nonessential expenses? Try to see what you can do
to save money. Now, try to create a budget plan that spells out how much money
that you will spend each month. Don't forget to set aside as much money as
possible for savings.
6. Keep Track of Expenses
Now you have to live within your budget plan. Keep a notebook
with you at all times. Write down the amount each time you make a payment,
write a check or buy something.
7. Evaluate Your Plan
Are you spending more than you budgeted for? If so, where
is the extra money going? Is this a case of forgetting to put something in
the budget? If this is the case, adjust your plan. Or, do you need to cut
something else out of your budget?
Budget Worksheet
Take time to write down your monthly income and expenses.
You may be amazed at where your money is going.
By keeping better track of your money, you can better decide
what changes will have the most impact on your personal finances.
We have created a sample budget
worksheet (in Microsoft Word format) to get you started.
If you're like most people, you're probably spending too much money each month
to pay off your credit cards and loans. The second article in this series,
Living Within Your Means, will give tips on how to get out
of debt.