When you are young, just beginning your career, often, your income is slim. During this stage of life, you have to stick to your budget and start making choices that will lead to financial stability and success in the future. Even though there isn’t much to work with, you need to minimize your debt load and avoid accumulating credit card debt. The best thing you can do is start directing your money, no matter how small an amount, to the areas you know are best. Make sure you have basic insurance coverages, start contributing to your 401(k), and set aside money from each paycheck toward an emergency fund.
As your career gets going, you may start earning some extra money, but the crazy thing you will find is that there never seems to be enough. This is because you keep increasing the spend. You improve your living conditions, you get a more reliable car, you realize you want to be more generous and give to charity, you may get married and now have pressures to start a family, the list is literally, endless. You are probably most vulnerable to the credit card pitfall at this point because you have a million things you are trying to accomplish and you start to believe you should be able to afford it. The reality is, you can afford it, over time, just not all at once.
Later on in your career, you may start hitting some of your goals and start feeling better about your financial position. However, if you have kids, you will realize there still doesn’t feel like enough as you worry about helping them through college, paying for weddings and in general helping them get a better start to life than you had. It becomes more important as you have more money to know where it is going and make good decisions about how you spend, save and invest that money. This can be overwhelming and sometimes people make some very poor decisions with their money because they don’t have a plan. It is too easy to just spend money as it becomes available on home improvements, cars and other ‘wants’, when the reality is you may have needed to save some of that money for the future.
All of these stages demand more money from you then you will probably have. How do you deal with this? The best thing you can do, is make sure you are maximizing the money you do have. The problem is, if you aren’t tracking your finances and comparing it to a meaningful budget, you really don’t know what you have. Every month is a surprise. Some months you may feel really good and suddenly you have a car breakdown, or your property taxes come due, or you overspend while on vacation. A good financial tool will not only track what you are spending, it will help you build a budget and compare your spending to that budget. This is your scorecard. The main barrier to truly tracking your finances, is the time it takes. But if you can develop a weekly habit of downloading your financial accounts (Bank and Credit Card Transactions), you will save yourself stress and worry and will have a better chance of getting yourself on the right track. If you want to save yourself a lot of time each week, the www.xlyourfinances.com budget spreadsheet is designed to not only make this weekly process quick, it also makes it easy. The spreadsheet is automated to auto-label your transactions, remove duplicates and validate your downloads. The transactions are summarized and compared to previous months and years and most importantly, compared against your budget.
Since all your transactions are in the spreadsheet, the budget inside the xlyourfinances spreadsheet shows you by category what you have spent over the past few years and makes it easy to create that meaningful budget. The budget tab becomes your scorecard as it compares your actual spending to your budget through any date range you would like to look at. You can compare by month, year to date, or even look at a previous year.
The xlyourfinances spreadsheet not only saves you the time of building your own spreadsheet, it is automated to make the weekly process quick and easy. Your balances will match your online accounts because it won’t allow you to post duplicates and you can easily see the last transaction you posted. All your financial history is stored in one place, year over year, which makes doing taxes and anything that requires knowing your past history (verifying when you made a purchase for a warranty claim etc) simple and quick.
Xlyourfinances budget spreadsheet also has a cash forecast. This is an invaluable tool to ensure that you never overdraw your bank account. You may have multiple accounts you are juggling and you need a tool that can handle them all!
Throughout all these stages of life, you have the added stress of planning for your future retirement. How much should you be investing and what kind of investments should you be making? You will want to work with a certified financial planner to make sure you are doing the right things. When you sit down to talk to your advisor, they will have a lot of questions about how you spend your money, what your goals are, and what is your net worth. If you have the xlyourfinances budget spreadsheet up and running, you will be able to confidently answer all of their questions, because you have already took the time to figure these things out.
No matter what your current financial position is, knowing where your money is going and directing it to where you want it to go, will lead you to financial peace and stability. You can make sure you are saving appropriately, building your financial net worth, and see those improvements, year over year. Don’t go another day in the dark, invest in the budget spreadsheet designed for every stage of life at www.xlyourfinances.com.
"Expert Interview with Brad Hoffer of XLYourFinances on Expert Excel Tricks"
XLYF's Brad Hoffer took a moment to tell us about the spreadsheet, some possible applications, and ways to save time and money with some black belt Excel kung fu.
Can you tell us a little bit about XLYourFinances? When did you get started? What prompted you to start your own company?
XLYourFinances is a Microsoft Excel personal finance spreadsheet. I have used Excel virtually every day for the past 15 years in the various jobs I have had as an accountant. This has allowed me to learn some of the advanced programming capabilities that exist in Excel in order to build user-friendly spreadsheets to solve complex problems and processes.
As I would learn tricks at work, I would incorporate them into my personal finance spreadsheet. In 2009, I decided to tackle making my spreadsheet "unbreakable" so that others could use it as well. This process took a lot longer than expected; and by the time I put together instructional videos and created a website, it was towards the end of 2010.
I have always wanted to have my own company, but had never found something that I had enough passion about to pursue. Personal finance is definitely something I have passion about, so it made sense to create the spreadsheet and the website, and start helping people with their finances.
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In that same post, you also talk about a bunch of really useful time-saving tricks on Excel. Can you share a couple of these tricks with us?
The ultimate source for learning tricks in Excel is www.mrexcel.com. I recently supported Bill Jelen's (founder of mrexcel) campaign on Indiegogo. He raised $25,183 to publish his 40th book titled, 'MrExcel XL Book - 40 Greatest Excel Tricks'. I am excited for the opportunity to contribute tips and tricks for this book. With that said, if I had to give one piece of advice to someone wanting to get to the next level in Excel, I would say to learn the 'SUMIF' function. Once you master how this function works, you can start doing some really cool things in Excel.
Any other advice or encouragement for people looking for financial freedom this year?
There is an ancient saying by Ahikar that goes, "I have hauled sand, I have carried salt, but nothing is heavier than debt." Being in debt is kind of just a way of life for a lot of us. I think making a commitment to get out of debt is one of the best things you can do. I'm not as worried about our mortgage, which is for a house that typically retains its value. I am concerned about our credit card debt, where we are buying things we cannot afford and then paying them off over time. When you use your credit card, make sure that you can pay it off in full each month, and make sure that you are spending less than you are making.
In summary, it is difficult to make positive changes which is why I love this quote from Robin Sharma ... "All change is hard at first, messy in the middle and gorgeous at the end."
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I have been an Auditor, Analyst, Accounting Manager, Business Systems Manager, Controller, School Board Vice President, Director of Finance, CFO and COO over the past 2 decades of work experience. In my free time I developed the XLYourFinances spreadsheet and website I enjoy golf and spending time with my family. We attend church at LCBC.