Top 4 Things Everyone Should Know About Their Finances
November 22, 2009 – 2:10 amI listen to one hour of the Dave Ramsey show each day I workout, and it drives me crazy how many people that call in who are overwhelmed and yet don’t even know the most common values. I do know what it feels like to be in debt and behind on bills, but I still find it hard to believe that people don’t even know how much they earn.
Below is a list of the four key things everyone should know at all times:
- Monthly (or annual) income. Ideally you should know both your gross and net income, but in a pinch your net income (i.e your take-home pay) is the most valuable of these two choices.
- Total Debt Outstanding
- Average Fixed expenses (rent or mortgage, minimum debt payments, insurance, utilities, etc).
- Expected savings or spending overage.
If you think about it, this is essentially a very basic budget.
Gross Income
-Taxes
=Net Income
-Debt Payments
-fixed payments
-savings (hopefully)
=0
Budgeting doesn’t have to be complicated, although I am an advocate of keeping a detailed budget if you truly want to make quick progress towards your financial goals. I’ll be expanding on the topic of budgeting in future posts, including how my wife and I budget and some of the benefits to keeping a detailed budget.
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