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February 1, 2011

I am teaming up with my fellow bloggers/BFFmajors to engage in some tandem blogging about stuff we read about in Real Simple Magazine. Today we are discussing financial advice. If you don’t get your fix for this meaty subject from me, please, stop by Attempted Domestication and Another 20 Something Blog. Go to there. Get yours.

I do not care much for money. Or, rather, I do not like talking about it. Which is weird since I am an accountant.

I have never been particularly comfortable with public discourse on budgets or affordability, which is why some my favorite financial advice (which I am perfectly happy to discuss) is to know what you can afford. I’m not sure if someone told me this, or if I read it somewhere, or if it is a fancy way of saying “budget” but I will let you in on how I do it.

To get started one must:

  1. Know how much each paycheck brings in after deductions and taxes.
  2. Know how much is paid in bills (I count groceries as a bill).
  3. Make short and long term savings goals. (For example, this year I have a wedding and within five years I would like to own a home.)
  4. Analyze spending for a month. Know what is a consistent necessity (transport), what is an occasional necessity (new boots), what is a luxury (hello, Kate Spade), and what is a one time expense (food processor).

Important disciplines one must engage in:

  1. Treat savings like a bill.
  2. Plan ahead. Monthly and weekly plan out purchases and dining out.
  3. Check bank account daily and remember financial goals.

Since I live with my fiance, we have set up a system that makes all these things much easier. We have two joint accounts, in which each of our checks is deposited. One is for rent, bills, utilities, and groceries. The other gets savings deducted out and is used for spending. This allows us to see exactly what we have to spend, and therefor we know exactly what we can afford. No public discourse necessary.

One Comment leave one →
  1. February 3, 2011 3:23 pm

    We have two “checking accounts,” too–one for bills and one for “debiting.” It really helps to stay organized!

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