How To Save Money In and Around the Home

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Whether or not the Great Recession is over, it never hurts to do a fiscal check up, just to make sure you are on track to achieve your financial goals. A fiscal check up can help you save some money and focus your resources on the things that are truly important to you. Part of the check up will include comparing your current expenses with available alternatives.

You might be able to save a bundle on things like property insurance or telephone service.

Your Financial Journey

Think of your finances as a journey. With any journey you need to know three things: where you are right now, where you want to end up, and how to get from Point A to Point B. Start by creating a net worth statement.

Grab a sheet of paper and fold it in half.

  1. List all of your assets (things you own) on one side of the paper, then list all of your liabilities (debts you owe) on the other side. Total up both sides.
  2. Subtract your liabilities from your assets. Whatever is left over is your net worth.
  3. Next, create a cash flow sheet.

Grab another sheet of paper and fold it in half.

  1. List all of your monthly income from all sources on one side of the paper.
  2. List all of your monthly obligations on the other side.
  3. Total up both sides.

Subtract your total monthly obligations from your total monthly income. The result is your cash flow. Your net worth and your cash flow represent your Point A.

Now determine where you want to end up financially by the time you reach retirement age. This is totally subjective, because everyone has different needs and desires. Regardless of your goals, unless you write them down, chances are you will never attain them. This is your Point B.

Create Your Budget

Finally, you need to create a workable budget. Your budget is your road map that will help you get from Point A to Point B. A budget is not a dirty word. It simply gives a name to how your spend your money.

Grab another sheet of paper and fold it in half. List all of your monthly income on one side, then list all of your monthly expenses on the other side. Unlike your cash flow sheet, the amounts on both sides of your budget must match. If you have money left over, assign those funds to a category such as Savings or Investments.

This is where you begin to compare your current expenses, such as how much you are paying for property insurance, or your cable bill, with alternative providers. By doing an annual check up you can save money around the house.

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