Military Finances 101: It's All About the CashManaging Your Finances
Today's blog post was written by Tonia Peasley, AFC®
The New Year is here, so it is a good time to start thinking of cash flow. Why now? November starts the holiday season with spending that often leaves us wondering in January, when we get the Credit Card bill, where did all my money go? So, follow a few steps to help answer your own question.
- Start a spending plan now. You can pull Credit Card statements for the months of September, October and November to get an average of what your usual spending is. If you would like an easy way to track expenses, lets us know and we'll send you an excel spreadsheet that will help breakdown your spending and categories. The key to being consistent about a spending plan is finding a resource that works for you. Just ask, I have a lot of resources in this area.
- Let’s talk cash flow. What exactly is cash flow? Cash flow is basically your money coming in minus your monthly outflows to determine your net discretionary income. According to a statistic cited by BBC news, the cost of living for Americans has risen by 6.2% over the last year1 - the highest rise in three decades. What that means for you, is it is important to know where you are spending your money to make sure, over time, you are still able to meet your goals with the financial plan you have set in place.
- Looking at your spending plan accomplishes an added bonus. By looking at your credit card spending and amounts coming out of your accounts, you are making sure that spending is being done by you and that no fraudulent charges are taking place. Often times, someone trying to commit fraud, will start with small charges on an account or credit card, that can easily be overlooked. The charge will then jump to a large amount and will draw your attention. This can be avoided by maintaining oversight of your monthly charges and disputing any charges you are not familiar with on your account.
- Lastly, don’t let those subscriptions get away from you. We have all been known to add a subscription on to our account that we may forget about a month or two down the road. By reviewing your accounts on a monthly basis, you keep a firm hold on the subscriptions you are really needing. I myself have been known to blow this tip. I once paid for double pest control service on my home for 6 months because of an overlap in charges from two different companies. Had I been paying attention to my statements; this could have been avoided.
If creating a spending plan and staying accountable to it is something you need help with, let us know. We are happy to be your accountability partner to help you meet those financial goals in the New Year.
If you found this article useful, you might like the following blog posts:
Military Finances 101: What's the Deal with I-Bonds?
Military Finances 101: Should I Use My Roth IRA as an Emergency Fund?
Military Finances 101: Where to Park Short-Term Money
1Fact-checking claims about US economic progress, By Reality Check team BBC News