by Amy Lawson MBA, CDFA®
I started to post on Friday this week, but it occurred to me that on a Friday evening, you would probably prefer to just sip a glass of wine… without reading about money. Am I right?
We are enjoying our third glass of wine together. At this point, you have chosen to steer clear of the rabbit hole of guilt for those less-than-perfect financial decisions, choosing instead to take responsibility for where you are NOW in your financial life by exploring your feelings about money.
You now realize those feelings may have been created in a myriad of moments far beyond your control. More importantly, you have learned, or are starting to see, the future does NOT have to equal the past. It’s all about choices.
So, what’s the next “sip?” Taking control of your hard-earned cash. But wait, aren’t we supposed to take life in stride? We’ve all heard, “Oh, go with the flow.” Or, maybe it is just those of us with a Type A Personality, a remark I unmistakably resemble, who have heard it ad nauseum.
Sometimes in life we have to let go and go with the flow; we can’t control the entire world after all, though some of us would make the most benevolent of dictators, would we not? I’m joking, of course (she says with crossed fingers).
But, when it comes to our money, we need to direct the flow or we’ll find ourselves in the poor house, not to be confused with a “pour” house, which is sister-speak for our favorite wine bar.
Before we can direct the flow of our money, we need to know how it flows. We need to know how much flows in and, more importantly, how much flows out. After all, it’s not how much we make that matters, but how much we keep.
Stop for a moment and think about the inflow and outflow of your money. Does thinking about the inflow of your money evoke a different feeling than thinking about the outflow? Do you feel as though your money trickles in like a mountain stream during the spring thaw, but rushes out like a raging river cutting through its bed at flood stage?
If so, it’s OK. The good news is you are not alone. More good news is you can take control of this part of your world. It’s time to get to know your flow. Don’t worry, this step is not only simple but quite easy.
Here’s what you’ll need:
- Two or three sheets of paper, nothing fancy, simple copy paper will do;
- A pencil and eraser;
- Last month’s bank statement(s); and
- A calculator.
On the top of one sheet write the word “Inflows.” Create columns for each type of income, for example: Salary/wages, rental income, portfolio income, social security, etc.
On the top of another sheet(s), write the word “Outflows.” Create columns for each type of expense, for example: car payment, car insurance, car maintenance, cleaning supplies, clothes, cosmetics, credit card payments, dining out, gasoline, groceries, hair care, health insurance, homeowners insurance, mortgage, prescription medications, shoes, skin care, student loans, and, of course, WINE.
Now, go through last month’s bank statement and write it all down in the proper column. If you feel the urge to whine, stop and choose to “wine” instead.
After you have written it ALL down, add up your sources of income, then add up your expenses.
Next, subtract your total expenses from your total income.
Voila, now you know how your cash flows! If the flow isn’t positive, don’t despair, we’ll address how to improve with our next “Glass.”
Until next time,
This week’s wine recommendations come from Argentina.
RED LOVERS: 2008 Alamos Cabernet Sauvignon. “…aromas of red fruit flavors, sweet spice and a touch of fresh mint. Garnet jewel toned, this Cabernet Sauvignon is full and soft with layers of red currant and cassis, notes of cigar box, leather and ripe black fruits. The wine finishes with finely grained tannins that add structure and length.”
WHITE LOVERS: 2008 Alamos Chardonnay. “…a fresh aromatic profile with ripe citrus fruit, layers of floral notes and a touch of vanilla. The mouthfeel is full, clean and crisp with pear, apple and a touch of grapefruit along with sweet spice. All this culminates into a bright, crisp finish with refreshing acidity and balance.”
Another reason to try Alamos… The vinery blends grapes from Argentina’s many distinct microclimates to create flavorful wines with distinctive flavors, aromas and textures. Sort of like our lives. We can take all of our experiences, good and bad, and weave them into a wonderfully colorful life. Oh, by the way, the average price for Alamos wine is $11 per bottle. Salud!