The following is a tutorial on how to gauge your financial well-being based on your budget. If you have not already completed a budget form please proceed to Step 1: Organize. There are several key pieces of information to consider when reviewing your budget. The following items are especially important. When reviewing these items you should be able to gain a good outlook of your financial health. Disposable income is the total amount of money that is left over from your net monthly income once you have paid all of your monthly expenses. Your expense-to-income-ratio is the measurement of your monthly expenses versus your total income. Example, if your take home pay is $3,000 and your monthly bills and payments are $2,200 then your disposable income (left over) is $800 ($3,000 – $2,200 = $800) ($2,200 divided by $3,000 = 73.33% expense-to-income ratio). This means that you have $800 left over each month after you have paid your expenses and you use 73.33% of your income each month. If your total monthly living expenses are greater than your net monthly income then you have a deficit (also called a loss or a negative budget). A loss clearly shows the need for a change in spending habits, as long-terms deficits will almost certainly result in severe financial difficulties. Even if your expense-to-income ratio is below the deficit level, you may need to alter your spending habits. As a general rule of thumb, a healthy budget will have an expense-to-income ratio that is less than 90%. There are several important factors to consider when reviewing your credit card accounts: After reviewing your budget you should have a general idea of your financial health. If your budget and/or your credit card accounts show signs of potential financial distress, it is imperative that you take action immediately. For advice on how to take control of your financial situation please continue to the final section of this tutorial. If you are unsure on what steps you need to take to improve your financial health you may benefit from our professional advice. Do not hesitate to contact CCMS for a comprehensive budget analysis. Our counselors have been trained to review your current financial situation, answer your questions and provide you with compassionate, professional assistance to help you meet your financial needs. All counseling sessions and personal information is kept strictly confidential.Disposable Income
Once you have a realistic budget the next step is to take an no non-sense view of your current financial situation and to start a plan that will ease your financial woes.
STEP 2: DISPOSABLE INCOME
DISPOSABLE INCOME
EXPENSE-TO-INCOME RATIO
UNSECURED EXPENSES
THE NEXT STEP
STEP 3: CONTROL SPENDING
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