50% of Americans Are Bankrupting Themselves. Are You?

bucket cashSkip all the investing decisions and future planning and even forget trying to balance your checkbook. Simply answer this. Do you spend more than you make? According to Rasmussen Reports, the answer is yes for over 50% of Americans. Here’s a simple exercise to check if you’re running yourself into the ground and steps to fix it.

  • Create Money Buckets: sometimes it feels impossible to figure out where all your money goes so create 3-5 bigger buckets like Home, Fun, Transportation and Food. Grab your bank statement off your banks website and force all last month’s expenses into one of these buckets.
  • Predict the Future: most people can anticipate upcoming costs like new tires for the car or birthday gifts for that special somebody.  As “one-time” costs start adding up you can outspend your paycheck without ever living beyond your means. Make a list of costs you expect in the next 90 days.
  • Total it up: quick fact check. Between your buckets and upcoming expenses are you making more than you spend? Sounds simple but when’s the last time you checked your money out vs. money in?
  • Stop Reckless Spending: Once you get a feel for the cash in, cash out flow try and find two areas you are spending more than you thought you were. A coffee on the way into the office cost you $55 last month. Does that surprise you?
  • Make A Rainy Day Bucket: How many times has an unexpected expense popped up and entirely ruined your week? Make one of your expense buckets a place you commit to save as if it were an expense and only use this money when you notice you’re bankrupting yourself by outspending your income.
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