How to use the 'Financials' section in your CEO of My Own Life® planner
Today we are going to be talking about all things money and how you can use the monthly financial pages in your CEO of My Own Life® planner to manage your personal finances.
The first step to understanding your financial position is to account for every single penny coming in and coming out with a positive result being the goal. And yes, I do mean every single penny. In the society where we tap to buy and rarely handle actual cash, it has become very easy to overspend and end up in the overdraft without even realising it. Having a set budget and being more aware of your spending habits, you will be on your way to becoming a lot more financially smart.
Financial management may seem daunting at first, but I hope I can convince you otherwise. Today we will cover the basics; how to create a simple monthly budget, track outgoings and review balances.
Important! But as with anything in life, it all starts with making a commitment. Make a decision to be more financially accountable this year and dedicate some time each week/month to review your finances.
Managing Your Personal Finances
The three basics:
- Create a monthly budget
- Track your monthly outgoings
- Review balances and adjust next month’s expenditure if/where necessary
1. Create a monthly budget
In the financial pages, we will be using columns: 'Budget' and 'In'.
- Salary: typically the ‘Budget’ and ‘In’ sections (money received) will be the same if you are receiving the same salary each month. If you are self-employed and your income varies, enter an amount you are expecting to receive. The general advice is to capture the after-tax figures here (unless you wish you track tax as an expenditure).
- Other income: this would cover dividends, income from a side business, AirBnB, eBay sales etc. You can have ‘other income’ as one overall entry or expand to cover different income sources.
- Total income: the total income you are expecting to receive this month.
Now let's create a budget for all of your monthly outgoings. If you were to follow my suggested way of keeping track of your monthly spend, the first step is to group expenditure by type:
- Regular bills: any bills which remain the same every single month; your mortgage/rent, utilities, gym, insurance etc. *Tip - as regular bills tend to never change you could group them as one overall entry in the financial pages for the following months.
- Variable bills: such expenditure would be: food, socialising, travel costs and anything else that changes month on month. If you are struggling to set a budget for your variable bills, look at your last month’s expenditure as a reference point.
- Debts: any debt commitments, such as student loans, car finance, credit cards and so on. While this is a regular bill, I like to keep it as a separate entry. This helps me to see all the debts in one place and I can focus on clearing them as soon as possible.
- Savings: make a provisional budget for your savings! You can even budget to save for different things: general savings, holiday, etc. If you are not in the position to save at present, that is okay, enter zero but keep the entry in. When your circumstances change and you are in the position to start putting money aside, do it then.
(amounts for illustration purposes only)
2. Track monthly outgoings
In the financial pages, we will be using columns: 'Out' and 'Var' (for variance).
Capture your monthly outgoings in the 'Out' column and update the 'Var' column if the actual spend is higher/lower than the set budget.
- print/look up your monthly bank statements to work out your monthly spend
- account for all your receipts if you were using cash
3. Review balances
Now, let’s take a look at the bottom line. Total up all the sums and evaluate your financial position looking at the 'Monthly Totals' row.
Monthly Totals row explained:
- Under the 'Budget' column: if you have allocated all of your expected income to the four expenditure groups, the variance between your expected income and budgeted outgoings should be zero or a positive number (if you have not).
- Under the 'In' column: total income received.
- Under the 'Out' column: a sum of all the outgoings.
- Under the 'Var' column: to calculate = total 'In' less total 'Out'.
Is the total monthly variance ('Var' column) between 'In' and 'Out' positive or negative? Review each expenditure category and adjust your spend where necessary next month.
Use the page on the right for notes, calculations, receipts, brainstorm ideas on how to increase income/ reduce spend, - whatever works for you.
Managing Your Business Finances
While the financial pages were designed with personal finances in mind, you can choose to use them for managing your business financials instead.
You could track total sales, invoices due as an income, and any money spent on your business as an expenditure. As each business is different you may want to come up with your own expenditure grouping names.
(amounts for illustration purposes only)
There are various ways to manage personal/business finances and these financial pages were designed with a minimalistic look intentionally, - so you can adapt them to your way of planning. But I hope above has given you some ideas.
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