I hope you have your “boss hat” on, because today we are going to start delegating those money jobs. (If you missed yesterday’s email where I explain how to be the boss of your money, go check it out here.)
The first rule of delegating is to start simple, get fancy later (and then only if you need to).
To me, the simplest type of “job” for your money is one that is fixed. Fixed expenses are simple because they are the same, predetermined amount every month. You don’t have to think about them too much. And you certainly don’t have to spend a lot of time tracking your spending on them. There are no surprises with fixed expenses.
Your mortgage or rent is a good example of a fixed expense. Each month, you owe the same amount. End of story.
What other expenses in your budget are fixed – same amount, every single month?
- Property taxes?
- Insurance premiums?
- Cell phone bill?
- Internet bill?
- Any loan repayments?
What expenses could become fixed? Here’s one example of how to “fix” a variable expense:
I called our utilities company and asked them to put us on a level pay plan. This might be called something different in your city, but what it means is every month you will be paying the average of your last twelve months’ worth of bills divided by 12. Once a year, the account will reconciled and then adjusted for your next 12 months.
As you go through your expenses, you may realize that you need to cut your spending. Maybe you’re running a monthly deficit; or maybe you are in balance but you aren’t saving enough to meet your long-term goals. We tend to look to variable expenses when we need to cut our spending, but fixed expenses can also be reduced.
Mortgages can be refinanced; insurance premiums can be shopped around; cell phone plans can be negotiated down – or cancelled altogether. Don’t assume that a fixed expense means you’re stuck paying that amount until the end of time. You are still in charge of your money, even when the expense is “fixed”.
Your homework for today is to go through your tracked expenses and compile a list of all the fixed ones. List the items and their amounts. If you need to gather more data, feel free to check your bank account or credit card statements.
Simple, right? Tomorrow we might have to get a little fancier, but don’t worry, I’ll walk you through it, step by step.