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April 2005 |
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 Budgeting is rarely a matter of just creating the budget and living by it. If it were that easy, everyone would have a positive net worth. Rather, budgeting is an ongoing process. Some are good at it. Others are not. But here's a little secret: Those who are good at budgeting, actually work at it. They spend a few minutes daily or weekly making plans for their money. And they spend a few seconds considering each expenditure, no matter how small. They spend a little energy to know exactly where their money is going. Makes sense. After all, we spend a lot of energy earning money. Shouldn't we care how we spend it? Last month, Debt Matters challenged you to calculate your disposable income. If you did that, congratulations on increasing your financial savvy. Being April, we challenge you to stop fooling … yourself! Find out exactly where your money is going. For 30 days, we challenge you to track all you're spending. You probably balance your checkbook or perhaps you track more than that on accounting software such as Quicken.® If you do that, you're already half way there. But when you take $60 out of the ATM, do you have a record of where that goes? Does it seem to evaporate? And when a credit card statement arrives, is it ever higher than you expect? These are the areas we want to look at this month. Get a small notepad and small pencil suitable for carrying everywhere and write down everything you spend for 30 days. You don't have to change your habits. This is just a fact-finding exercise. Just write down every little expenditure. Bottled water, coffee, newspaper, magazine, haircut, sub sandwich, gas, parking meters, candy bar … get it all down on paper. For 30 days be a real stickler. At the end of the month, you should be able to see everything you spent, including rent, utility bills, car payment etc. You can see how much you're really spending. Is it more than your income? Go down the list and mark necessities and luxuries. Can anything be cut out to increase your savings? Was your disposable income calculation accurate? Do you want to modify your budget? We think you'll be surprised at where the money goes and have clearer vision for budgeting. Good luck and see you next month. |
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