Here we sit at the mid-point of the calendar year. Now is a good time to revisit your financial situation and see where you stand. To help get you started, I’ve put together a series of ideas to help you conduct your own mid-year financial check-up. First up in the series is a review of your first 6 months’ expenses.
Later on this month, I’ll be sharing the result of my own check-up, which will include a review of my saving and debt-reduction goals. To ensure you don’t miss an upcoming article, subscribe to Prime Time Money today.
Review 6 Months’ of Spending
Let’s first look at our spending. Visit your bank (spending) account online and export the last 6 months of transactions. If you’re proficient with a program like Excel, import the transactions, and filter by category for an easy to read view of where your money has been going. If you use a separate program, like Quicken, you’re already set.
Not into spreadsheets and programs? Take a couple of your monthly bank statements and total up your expenses by category. Multiply that number by whatever it takes to get to 6 months (3 if you used 2 months’ statements).
Are You Spending Too Much?
Once you have an accurate picture of your spending, decide whether you’re spending too much. What’s too much? That’s for you to decide really. You can also review these suggested percentages I tracked down.
Ways to Cut Your Spending
If you’re not comfortable with your level of spending, consider trimming expenses by:
Eliminating Unnecessary Recurring Expenses – Look for items like cable TV, magazine subscriptions, and gym memberships. These are all unnecessary items which could be eliminated. Removing these items reduces your spending and frees up room in your budget for more savings and debt reduction.
Reduce Flexible Spending – Find a few categories of non-recurring items (i.e. dining out, entertainment) that you could reduce by incorporating a budget. As an example, see my budget (easy and smart) article.
Go Cash Only for a Week – Get your spending under control with this simple, “old-school” method.
Bonus: Emergency Fund Guidance
If you’re into keeping an emergency fund (and hopefully you are) take a look at your total spending for the last 6 months and see if your e-fund measures up. If it doesn’t, consider beefing that up the rest of the year.
How do you decide if you’re spending too much? What methods are you using to reduce your spending?
Photo: by ridge