Last week’s post shared the numbers you need to know – health edition. Now it is time for the personal finance edition. Does money dominate your life or stress you out? Will this be the year where you take control of your money instead of it being in control of you? When you think about financial freedom – what does it mean to you? This post will share the method and rationale of knowing how much you make (your income), your expenses, how much you owe, and how much you save and/or invest.

You can choose whether or not you want to address this as an individual or as a family if you are part of one. Also, with most of these categories, you can choose if you want to take a look at the number for the year, by the month, or even by the week. For simplicity’s sake, we will base this post on finances in a month.

How much are you bringing in?

Merriam-Webster defines income as money earned from work, investments, business, etc. This is your gross pay before you “lose” money to taxes.

When you’re first getting started on managing your finances, don’t even worry about what your salary is. Focus on your net pay or the amount that makes it into your bank account. How much are you bringing home? If you get paid weekly, multiply your paycheck x 4 to figure out how much you make in a month. If you get paid every two weeks, multiply your paycheck x2.

Now you can calculate this exactly if you’re salaried. However, most people get paid by the hour which means that every paycheck is slightly different. When I initially started doing this, I was getting paid hourly. So instead of making an exact calculation, I rounded it down. So if I made $1,736 per paycheck, then I told myself I made $1,700 every two weeks so $3,400 a month. This gave me flexibility.

If your income is not so static, which applies mainly to jobs like waitressing or sales, then I would try figuring out the average income. For example, look how much you made in total in the last three months. Take that number and divide it by three. The result will give you the amount you would typically make in one month.

Did you do the math? Did you figure out your number? That is your net monthly income also known as your take-home pay. Write this down and circle it.

What are your expenses?

How much money do you need to live? The answer to this question will tell you what your cost-of-living is. This is also the part of your money that you have the most control over.

First, list your static or constant expenses one under the other. These are things like housing (rent or mortgage), transportation (car payments, car insurance, bus fare), childcare costs, etc.

Now catch variable or changing expenses, like food or utilities, by seeing how much you spent on it last month. The simplest way to see how much you’re spending is by using a service like Mint or Personal Capital. However, you have to enter your bank log-in info and this makes some people uncomfortable. Some banks out there will categorize your expenses for you. But for most, your next option is to look at your last bank and credit card statements.

Add up how much you spend in each necessary category. While you’re there, also mark how much you spend on things you want such as entertainment, shopping, etc. Separate your expenses into needs and wants. Write down those numbers.

How much do you owe?

Do you have a mortgage or car payment? How about school loans? Credit card debt? It’s time to face the music. Often, this is the area of our money that controls us. Write each debt down as well as their minimum payments and the interest you’re being charged. The purpose of writing down the minimum payments and interest charged is to help you figure out the best plan for paying those debts down.

You have those numbers down? Good. Though facing your debt might be overwhelming, the only way to get to wherever you want to be financially is to be brave enough to take a real look at your challenges. Debt can easily weigh down your financial future if put to the back burner.

How much are you saving or investing?

If you have savings or investing as a line item on your budget, then you are well on your way. However, if you haven’t done this yet, you may not know how much you’re saving. If you have a retirement plan at work, how much are you putting in every month? If you don’t have one available at work, do you contribute to a traditional or Roth IRA? Write down how much you’re investing monthly.

How about your savings? This should be money kept separate outside of your regular checking account. Write down how much you’re saving monthly.

Now What?

There are many options now that you know what you’re facing. You can now take control of your money. Compare the numbers you wrote down. Is your income greater than your expenses? That’s great! That means you can save and invest. If you aren’t doing it yet, start.

If your expenses are beating out your income, can you decrease your expenses? You can negotiate some expenses like utilities or credit card debt payments. You can also decrease how much you spend on your wants. Don’t eliminate everything you like because who wants a miserable existence? Just get creative. Share subscriptions with friends where allowed. Find free versions of the things you enjoy. The world is your oyster! You might also want to look into how to increase your income. Can you get a raise at your current place of employment? Getting a promotion and/or changing positions can be an easier way to make more. Sometimes though, making more will require you to change jobs or get an additional one. You have options.

READ MORE: Save on your electric bill, your car insurance, and your groceries!

If you calculate your total debt and create a plan to pay them down, then next year around this time, you will see how far you’ve come. Take joy in the journey to your financial freedom. It may take time but it is happening because YOU are making it happen. That should give you some pride.

Take a look at how much you are saving and investing. If you found your income is greater than your expenses, make a plan to increase your savings. Watch it grow over the next year.

Having these numbers handy can help you to take control of your money. If you need help, take these numbers to a financial advisor, planner, or coach so they can help you develop a plan that you can be comfortable with. Money does not have to dominate your life. Once you have an effective and, preferably, automated system going, you will continue to yield good results and have control over your money.

These are not all the numbers you’ll ever need to know but it’s a great start. Things like your credit score and your net worth will automatically improve once you take control of your money. Now that you know your numbers, how do you feel about your financial picture? Have you come up with a plan to reach your financial goals? Share in the comments below.

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