| Doris Dobkins is the publisher of $mart Money New$. You can subscribe by
visiting her web site at
CreativeFinances.com |
It's fun to read financial profiles.
Humans, by nature, are curious about how much other people make and how
they live with what they make.
Profiles can communicate someone's
salary, how many children they have, how much they save, how big
their mortgage payments are, and what else they spend their money on.
In the study of profiles, it's amazing to find that how much one
saves has little to do with how much one makes.
Today, you get to write your own
profile. It can be a very revealing exercise, and I encourage you to
participate. Please take a moment and get a piece of paper and
pencil. I'll wait for you.
Ok, ready now?
If you are like me, you probably
didn't go and get that piece of paper. Go ahead; get it now!
At the top of the sheet, write your
name and occupation.
If you are married, list your spouse
as well and their occupation. Then list your children and their
ages.
Next, list your combined annual
income.
Now, of your total annual income, how
much (percentage and dollar amount) do you save. Please categorize
them as follows:
Annual Amount for each:
Retirement: $1,000 3%
Mutual Funds: $0
Emergency/CD/Savings: $500 2%
Educational Savings: $0
Other:
What??? You say you don't know? Well,
take your best guess and move on.
Now, write down some of your other
budget items:
What are your annual expenses for the
following: (I've plugged in some numbers and percentages as an
example.)
Groceries: $3000 10%
Eating Out: $1,500 5%
Movies: $960 (2 movies a month with popcorn and drinks) 3%
Mortgage/Rent: $13,000 43%
Vacation: $2000 7%
Car Payments: $4800 16%
Clothes: $1200 4%
Auto Insurance: $1400 5%
Gasoline: $400 1%
Other: $240 1%
TOTAL INCOME = $30,000 Total % should
equal 100
Isn't it interesting to see the
numbers annualized? They definitely make a greater impression on my
mind and give me a wider perspective.
This exercise is a bit different than
a budget. A budget lists your monthly expenses. We are focusing on
ANNUAL expenses. Sometimes monthly expenses make a bigger impression
when they are annualized.
If you have a budget, this exercise
will be easy. If you don't have a budget, you are probably
completely lost, and I hope that I've made a point. You will NEVER
get your finances under control if you don't know where your money
is going!
Get a budget. Find out where your
hard-earned money is going. Document your current profile and then
create an ideal profile as a goal. Each year, make some changes in
your lifestyle to get you a little closer to your goals.
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