The first step to taking charge of your finances is paying attention to what you are spending. It seems simple, but it’s always the hardest step to take.
Pull out your bank statement or go online and write down everything you spent on last month, and then add a star to any expense that is fluctuating or unnecessary.
Add all the starred items together. Divide the total by your monthly income. I think the percentage will surprise you, and I would bet that it easily tops 10%.
Even if you are an avid saver, and have been through this process before, sometimes you start sliding back into old habits. I am a relative newbie at budgeting, but I feel like I need to constantly re-evaluate. It’s practically a part-time job!
If you tend to use cash for a lot of things use your cellphone, or a notepad to keep track of where your cash goes.
At the end of a week or a month sit down with your choice of drink, cuddle up with a blanket, a notepad and pen (or your computer), and look at every dollar you spent.
Don’t be hard on yourself! Resist the urge to have guilt over that $4 latte or the $50 tab from eating out with friends. Guilt is just your brain’s way of telling you that spending doesn’t fit with your goals, and that’s pretty easy to fix.
Maybe you spent $500 on groceries, gas and incidentals. (don’t include your monthly bills, more on that later) And you look and see $100 is money you “blew”.
Set a goal to do better next week/month, and remember what your indulgences were (the new shirt you found for a steal, the new videogame or DVD that was just released, etc.)
The goal for the next month or week should be to trim it to $400.
The first month we did this I trimmed $800 of our spending. I promptly went out at the end of the month and spent $300. What can I say, bad habits are hard to break!
Kelly
