My brother is wonderful!
He is paying his way through school to earn his master's degree, while working, and he's going to graduate this summer with honors! I am so proud!
So when he called me telling about how he owed the IRS, I thought, "Huh?"
Apparently, he didn't have enough money taken out of his check, but I can't imagine how that's possible. Given his status as a student, his school loan from undergrad and any number of deduction he could claim, Uncle Sam should owe him. I don't know who did his taxes, but two things:
1. He should NEVER go back to them.
2. He's got to keep better records for tax time.
Besides that, he asked me about budgeting (a lump formed in my throat because 1 -- He asked me about personal finance. Yay! 2 -- He asked me about personal finance. Yikes! I'd better steer him right or I couldn't live with myself.)
Turns out that he knows how much he earns and how much his bills are, but somehow winds up short some months.
I peppered him with questions:
"Do you write down everything you spend?
"If you fly out of town to visit friends, do you write it down?"
"Yes, the plane ticket."
"But did you write down the magazine and bottle of water you bought at the airport, the dinners you had out with your friends, the cover to get into clubs?"
"If you stick 50 cents in the candy machine at work, do you write it down?"
"If you put $1 is a panhandler's bucket, do you write it down?"
A-ha! His hard-earned money is slipping through his fingers like sand.
I explained that if he gets a bagel everyday before work or rents movies every Saturday, that money adds up and amounts to one of the bills he owes. So, when he goes to pay that bill, there isn't enough money left.
If you're short $30 one month and everything continues as usual, then you'll be short $60 the following month and so on.
So we started with the BASICS. Keep a spending record. But I don't want him to lose out on any more money, so I told him to get a budget together now.
I e-mailed him the little Excel deal I made for myself. It's crude, but it's been effective. I also attached the spending record I keep to make sure I'm still on budget.
They're attached here:
I'm very excited because I want him to get his money on the right foot as he gets his degree and gets a fabulous new job. I just thank God he's not in debt like me. That should make things A LOT easier.
I know this is baby basic for most PF bloggers, so I hope I didn't bore anyone, but this is really important to me. This is the kind of stuff I started my blog for -- people like me who knew NOTHING about the financial basics, but were eager to learn.
All personal finance is built on this one premise -- spend less than you earn. The rest is details.