Managing money on your own

Career World, April-May, 2004

When you're out on your own, it's important to know how to manage your money. Most young adults start off with a limited amount of cash, and they're surprised at how quickly it disappears!

Answer yes or no to the questions below to check your money management skills:

* Sometimes I have to borrow money from my friends or family.

Yes or No

* I don't always have enough money to pay my bills when they're due.

Yes or No

* My monthly credit card balance is growing faster than what I pay each month.

Yes or No

* I have no idea how much money I have in my wallet or bank account.

Yes or No

* My wants and needs are pretty much the same.

Yes or No

Here's the bad news: If you answered yes to even one of these questions, you may have money management problems. Try the process below to get yourself in better financial shape:

* Write down a monthly dollar amount for each line in all three columns below.

*Then total up the amounts for each column and compare them.

Needs            Monthly
(must-haves)     $ amount

food
transportation
rent
car insurance
other
Total


Wants
(would like, but    Monthly
could do without)   $ amount

Ex: new car

Total

            Monthly
Income      $ amount

earnings
allowance

Total

Scoring

$$$ If your income total is higher than the combined totals of your wants and needs--congratulations! You're in great financial shape, You may want to increase your "savings" line.

+++ If, like most of us, your income total is higher than your needs total, but smaller than your needs and wants totals added together, then you're in pretty good shape. You simply need to prioritize what you spend on your wants.

!!! If your needs total is higher than your income total, then you need to take action! You must either increase your income or decrease your needs.

The goal is to match your income and needs, by increasing one and decreasing the other until they meet. It's called, "balancing a budget," and it's tough for all of us at one time or another.

To increase your income, you may have to find a new job, take on another job, or increase the hours that you work.

To decrease your needs, you may have to make tough decisions, like taking your car off the road and riding the bus to work, or moving in with your parents for awhile.

NOTE: It's important to have something in savings each month. Not only do you need to have a little bit of cash for unforeseen emergencies, but it's also good to save for something on your "wants" list. That way you always have something to look forward to.