When you’re trying to make all your money work for you, doing some quick calculations to see where your money is going, really helps.  In this way you can honestly face the in-flow and out-flows of your income and decide where you can save and where you can spend.  Here are a few ideas to get the ball rolling.

1) Where is it going?

Gather your bills, bank and credit card statements for 3-6 months, and a calculator.  Make a spreadsheet with rows that represent your expenses in detail– “haircuts”, “pet”, “gym”, etc.

2) Make it personal

It’s time to enter every single transaction you made on your bank or credit card onto your spreadsheet. Don’t forget to add the amount you were charged for interest, insurance, over-limit fees or ATM fees, and add a row for any savings.

3) The plus side

Conversely, it’s important to see how much money is coming into your personal balance sheet.  Add up all the deposits made during the last six months and divide by six–that’s how much comes in to you, on average, each month.

4) Trends that pay

Now you can see your personal spending and saving trends.  Subtract your expenses from your income number and if you’ve got a negative number, you’ve been spending more than you make–you’re not alone.  Take this number and multiply by 12—that’s the amount you’ve been overspending each year.

Now you can make honest decisions about where you can save a penny here and there and maybe re-think purchase trends over the year.  In this way you’ll be able to start fresh with a healthy saving and spending plan of action!