Introduction
I think we can all agree that time is the most precious and valuable resource to us. It would be very difficult for someone to offer you a trade where you gain something at the cost of spending 10 years in jail. If they offered something that would take 50 years to earn, such as millions of dollars, you may consider it, though even then most of us wouldn't take it due to the awareness of the missed experiences we would have; something money cannot buy.
We must accept the hard truth that we live in a world where our time has a value on it. The saying "time is money" is very true in most peoples lives. To simply be able to provide the basic necessities for survival, a person needs food and shelter - things which cannot be attained without money.
We get paid a certain amount of money per hour/month/year we work, therefore it should be easy to see that the amount of money we have/make is directly correlated with the degree to which we have control of our time. What I mean by this is that rather than spending 10 years in jail - we are forced into a mandatory trade of spending X years at work and in return we get the quality of life we desire. Though for most people, this is not the case as they manage money poorly and are frustrated with the mismatch in effort spent and output achieved - getting ripped off in the trade but to nobody's fault except their own.
The next few sections will be specific and easy guidelines to follow to help manage your money. Time is our most valuable resource, it makes sense to allocate a small portion of it to manage the rest.
Reference
Here is my finance sheet to manage money.
I have 2 sources of income, my job and I tutor on the side. On the right side, I have a list of all my expenses averaged out on a monthly basis. Like most people, I get paid biweekly and so I divide my monthly expenses into 2 portions, what I spend my first paycheck of the month on, and what I spend my second one on. Some subtle allocations to note are:
- Money for fun is in my first paycheck so I have some for the entire month
- Money for rent is in my second paycheck so I can always have it ready for the next month
- Money for groceries is split evenly among both paychecks
Your income
This is the power you have to work with. This is your weapon. Your shotgun or your dagger, whatever it may be - this is what you have. If you want to earn more, make it happen - but DO NOT spend more than what you earn. The long term result of this is loans with interest accumulated so high that you are only motivated to make minimum payments. In my eyes, working to pay off interest is negligibly different than spending the same time in jail.
Your expenses
Making a list of expenses isn't actually that hard. You simply have to review your past months spending. Most people can think of the majority of expenses off the top of their head, but for accurate results - simply go to your banking website and they'll have all your transactions. Here is a minimal list to start you off.
- Rent
- Groceries
- Maintenance
- Physical: haircut, shampoo, soap, a billion accessories for girls that I have no idea about
- Environmental: toilet paper, hand soap, garbage bags, other things you spend money on to keep clean
- Bills
- Internet, hydro and other monthly subscriptions to whatever you subscribe to such as Netflix or a gym membership
- Fun
Know how much money you spend on entertainment and allocate a certain amount to that - Miscellaneous
Things often times come up that cannot be accounted for. I recommend allocating a small portion of money to miscellaneous expenses. Keep in mind the more money allocated to this section is directly related to the lack of knowledge of your spending. - Invest
Without investing, we will be unable to make any large purchases such as a desirable mortgage or car. Allocate a certain amount of money to be put to a TFSA or any form of investment you prefer. As much as life is able right now, you can make your future "right now" a whole lot better. This also gives us the freedom to leave an unpleasant reality and start something new, a very important asset to have as life is unpredictable.
What to do
All you need to do is keep a note on your phone with all your expenses and how much money you have allocated to each one. When you spend money, go to your phone and subtract how much you have for that category. You already get your wallet out to pay, it's very easy to also get out your phone and make a quick edit to a note. Reset the values to the monthly allocation every month. If any of these go negative go back and redo your allocations. If you are missing a category, add the category and redo your allocations.
Conclusion
Needless to say, having money is awesome. Most of us wish we had more, but the truth is - that is completely in our power. The first step is to manage what we currently have.
