Where did the money go?


Do you ever get your group certificate from your employer at the end of the financial year that boldly shows the gross amount of earnings for the year and your eyes glaze over while you ask yourself “Where did the money go?”

Why don’t they just print the form with the NETT amount at the top so we are not drawn into the ruse that we have more money than we think we have? It would give us the option whether we really want to risk looking at the yearly tax that was deducted and curb our despair in the hope that next year will be a better one.

When I first started taking stock of my finances I broke down my fortnightly wage to give me some understanding of what happens from one week to the next. I found that despite me earning a reasonable wage, I lost forty three percent (43%) of my wages to deductions such as tax, superannuation and child support for my son. Whoosh, straight out of my pay before I even see it.

Then came the essentials: food and shelter. There wasn’t a heck of a lot left to play the loan and credit card game.

Some things CAN’T be altered. Tax will always be that necessary evil we can’t change. Superannuation in most countries has become compulsory, however some companies allow a bit of flexibility. The things we CAN change will make all the difference to your financial freedom.

Tax time

It sad to see that ‘tax withheld’ figure each year and I can’t help but think how much debt I could have paid if the tax office only gave it back to me just this once. And the interesting thing is that if we all got our yearly tax returned to us, how many would be right back in debt after one, two or three years? Most of us diligently go to our tax accountant each year and if we are lucky we can claim some deductions and get a little piece of it back. But the big question is: What do we do with the money? I know people who have already spent the money before they even receive it. They know it’s coming so they plan ahead; New curtains, a pool for the kids or a nice weekend away because “we deserve it”. Yep, I’ve been there.

Living from Pay to Pay

Do you live from pay to pay like most people? If I asked you at the end of your pay cycle what you spent your money on, would you know the answer to any certain degree? Unfortunately that’s the case with most of us. Most of us are not taught the value of money in terms of saving it and making it work for us. Some people wouldn’t survive if it wasn’t for credit cards, right?

We live our lives for comfort and convenience and sometimes if it means having something today rather than waiting for it, we sacrifice our hard earned money for the instant gratification of here and now.

Bank statement’s never lie

Here’s what I want you to do. If you do online banking I want you to log in and download the last twelve months of transactions. Most banks will have a function for this. If you don’t do online banking then go visit your bank and ask them to print out the last year of statements.

If you download the statement from your bank using a Microsoft Excel based file such as .csv then open it in Excel and use the filters to show all the categories of spending you made over the twelve months. You will be astounded by the results.

Bank Statement

If you have printed statements from the bank then buy yourself some coloured highlighter pens and assign a colour for each category. The question here is how much do you waste each year?