Budgeting: The Prequel

FF02022018

Happy Finance Friday!

We’ve officially completed one month into the new year.

If you’re like the average person you made a new year resolution to reign in your bad spending habits and save some money. Or maybe you decided to pay off your debt and cash flow your family vacation this year as opposed to putting the trip on your credit card.

To accomplish these goals you most likely sat down and hashed out a monthly budget. However, at the end of each month you’re coming up short and reaching for those credit cards you swore you would never use again.

What could be the problem?

You need to track your expenses.

This could be a daily task or a weekly task.

Here’s how you can do it:

  • Make a budget for next month
  • Find a designated place to keep your receipts. This could be an old shoe box, a manilla envolpe, an empty desk drawer in your home etc
  • Once you are in the new month, get and keep a receipt of ALL of your purchases
  • At the end each week, tally up your expenses and create corresponding categories for each group of expenses
  • At the end of the month, compare your planned expenses against your unplanned expenses
  • Here comes the hardest part: take a long hard look at your spending habits. Compare your expenses to your income. Get out your mental scissors so that you can cut unnecessary expenses out of your income so that you can actually stick to your budget

The saying goes adulting isn’t fun. This task may not be fun, but it is necessary and can be calming eventually. Once you become better with your money you remove a burden so many of us carry each day. And actually, not living pay check to paycheck or worrying about debt is pretty fun don’t you think?

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