Business & Finance Finance

Clean Up Your Financial Room and Keep It Clean

Copyright (c) 2008 Brooke Consulting Co.

When you clean your room, the first thing you do is chuck the things you don't need. Do the same with your finances. Do you really need a landline and a cell phone? Do you keep renewing that seldom-used gym membership in hopes that you'll start going regularly some day? Is your car always in the shop, or does it guzzle gas? Take note of your 'money pits,' and remove as many of them as possible from your life. Like single socks and bubble gum wrappers, they only serve to mess up your room again once you've tidied it, and you won't miss them for a second when they've gone.

When only the things you really need are left, it's time to put everything in its place. If you tend to make the same amount of money in a given time frame (i.e. regular paychecks) this is a relatively easy task. The financial self-help gurus will tell you to pay yourself first, but for most of us that isn't plausible. Pay your rent or mortgage first. Food, bills and credit card or loan debt come next. Pay as much of your debt as humanly possible. It feels good to be debt free, to owe no one, and once you're there your disposable income really will be at your disposal.

Once you've paid the necessities, find a place for what's next. Here's where saving comes in. Take your disposable income and cut it in half. Put the first half in savings, and take pleasure in the rest. Buy some chocolate. See a movie. Give to your favorite charity. You've earned it.

If you don't have a regular income, budgeting can be a little more difficult. You'll need a second place to put savings, a just-in-case-I-don't-get-the-contract zone. Give as much as you can to this fund, since you never know when you'll need it.

None of this is rocket science, and it's nothing you haven't heard before. Keeping your room clean requires discipline, though, and discipline is hard work. Be vigilant. In the end, keeping a place tidy is easier than having to clean up a mess.

On occasion, say once or twice a year, do another cleanup. You may feel like you've been keeping your room clean, but junk tends to build up in corners and behind the furniture. If extraneous expenses have found their way back into your life, toss 'em. You'll be buying your freedom.

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