3 Simple Documents Will Immediately Help Your Finances

3 Simple Documents Will Immediately Help Your Finances

I have three important things that I do every single January.

As, the New Year arrives, I take a deep breath, total up our expenses in every single category, and create an end-of-the-year spreadsheet. This Excel form tells us how much we spent in each category, how much we overspent (Yep! We do make mistakes and overspend!), and how we should change our budget for the upcoming year.

Here comes the part of this post in which I must admit that I am not much for making New Year’s Resolutions.  I don’t even use the word resolutions, because I don’t tend to keep them anyway.  But, I DO enjoy a bit of inventory-taking and goal-making.  I find this concept to be very different than making resolutions.  Resolutions seem to be bits of left-over guilt all mashed together into vast, unattainable visions of perfection.  I feel pretty imperfect much of the time.  I see no need to exacerbate the feeling.  Goals feel more concrete.

Many years ago, I quit my full-time job. I would primarily be a stay-at-home parent, which effectively cut our meager income nearly in half.  I quickly realized the importance of taking a yearly finance inventory, creating a new budget for the next twelve months, and making a list of short, medium, and long-term goals.  Without these life-changing documents, I really ended one year and began the next with no idea of “how we had done” or if we had made any progress.

Without any further adieu, here are your three assignments to do during the month of January. 

 Let’s get started!  

I love having a “game plan” to begin the year. 

I’m about to make this assignment SUPER easy for you! Sign up for my weekly newsletter. I know, this sound self-serving, but really I am acting in your best interest! You see, you’ll immediately receive my free eBook on cutting grocery costs.

But, this deal is even sweeter in January! Each month, my subscribers receive one absolutely FREE downloadable product. In January, it’s my 21-page Yearly Financial Planner. I put every form in this eBook that I use every month to keep my family’s budget on track and humming along briskly.

I’m sending out the product offer exclusively to my subscribers during January of 2020. So, hop on this link as soon as you finish reading this post. I’m sending the eBook offer to subscribers several times during January. Want it right away? Send me an e-mail at: hope@underthemedian.com. Tell me you signed up for the newsletter and I’ll shoot you a link ASAP.

ASSIGNMENT #1:  NET WORTH STATEMENT

Need helpful forms? Get our Personal Finance Planner, available for purchase in our shop.

What in the world is a net worth statement?  Simply put, it is a document that compares how much money you owe with how much money you have.  Ideally, the total of your possessions, bank accounts, and investments should add up to more than you owe your creditors.  I produce this document every single year in January.  In fact, I have all the totals from the last 20+ years listed on one document.  I know!  Crazy! 

Why is this document important. Simple. You can’t know where you are going until you know where you are at. Without this document, you don’t know how deeply in debt you are. It’s that simple. If you want to budget, you need to know how much money you actually owe. This document will quickly give you this information.

ASSIGNMENT #2:  MONTHLY BUDGET

Personal Finance Planner, available exclusively in our shop.

You have NO idea how many people I had had tell me that they either:

A) Can’t seem to live on a monthly budget

B)  See no need for a monthly budget

C) Can’t figure out how to put a budget together … so they just don’t.  

Okay, this is where I exhibit a little tough love.  If you aren’t living with an actual written budget and tracking every penny you are spending (to the best of your ability) you are digging a hole.  Each month that you fail to have a budget, you are digging the hole deeper.  You have no plan to fill the hole.  Additionally, even if you did, you never will, because you don’t know the depth of the hole. 

Sorry.  But, there it is – in black and white.  I’m a born pragmatist.  I’m about as practical as they come.  But, I don’t want you to stay where you are!  No!  I want you to join the ranks of those who live on a budget, plan for the future, and give every dollar a name!

Should I use a paper or an on-line budget?

 Should you manually record your budget each month or use an electronic method? Really it depends on whether you are more of a “pencil and paper” sort of a person or a techie.  For many years I was an “old school” paper and pencil type of person.But, then, when he was 16, my middle son took over our family budget for six months.  He’s an IT guy and immediately set it all up on the computer.  God bless him forever and ever!  I love it! 

Here’s a link to a post about why each of our sons takes over our family budget for six months before graduating from high school. Everydollar is not difficult to manage (even for a tech illiterate person like me).  But, your success depends on you going on-line and inputting your spending into the form on a regular basis. 

I recommend Everydollar for those who have access to the internet and are willing to spend time at the website every week. It’s so easy! Just sign up and it takes about 15 minutes to create your first budget.  Best of all, it’s FREE – my favorite word as many of you know if you’ve followed my blog for any length of time.  There are tutorials on the site to get you started and answer questions. 

ASSIGNMENT #3:  LIST OF SHORT, MEDIUM, AND LONG-TERM GOALS

This is where you begin to dream! When I first suggested to my husband that we live within our means and set goals, he thought that I was crazy! He actually said it out loud. We were both making a whopping $5 an hour and barely making ends meet.

At the point, I knew I’d need to appeal to his concrete-sequential learning style. I created a chart, showing where we were (Point A) and where we wanted to be (Point Z). Then, I mapped out a spending plan to bridge the gap from where we were to where we wanted to end up. Voila! Instant understanding and he was fully “in the game” with me!

I like to break my goals down into short term(2 years or less), medium term (2-5 years), and long term (5+ years)goals.

If you live “under the median” you do not get a “pass” on this important assignment.  In fact, it may very well be more important that you take this step than if you were rolling in lots of dough.  I would go so far as to say that it is only through having a list of written goals, that you will be able to see and achieve financial progress.  So, let’s get those goals written down and being working toward them!

That’s it!  That’s your January homework.  Let me know how you do!  I really want to know how it’s going for you! As we begin a new year, this is the perfect time to begin working on taming your financial lions and keeping them in order. Leave your comments or questions below.

2 thoughts on “3 Simple Documents Will Immediately Help Your Finances”

  1. Great video! Working with commission based income only is my only hangup.Our income has within the last 2 months has significantly improved. Time to adjust and take the last 2 month average for next months budget.

    • Good advice! Once you have a few more months of income, it becomes easier to average and figure out how much you should budget for each month. Then, when you have great month, save the additional income for months when the commission is less.

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