Not Sure Where Your Money Went?
by Michelle Jones
Do you have a steady source of income each year but are never quite
sure where it all went? Well, let's talk about that. Let's find out
where your money went, and how to keep this from happening again and
again!
* * *
I refer to this common financial problem as the
empty hole called "I don't know where my money went!" And trust me,
it is very common because most people don't like to budget!
And I'm here to change that!!
Though most of us know where our money goes in
general (because we have a stack of bills that are due each month),
there are still some spending areas we may not be sure about. Now this
doesn't necessarily mean you're spending money frivolously, but maybe
you're just not keeping track of the extra things like eating out,
entertainment, cards and gifts, medical and dental expenses, car
maintenance and repairs, household expenses and so on.
A few years ago my husband and I tried an experiment
and it was quite eye opening. For a period of one entire year we used
our Discover credit card for everything, even groceries and gasoline.
Each month when the statement came, I was able to see exactly how much
money we had spent and where it went.
We liked using the Discover card because they listed
our expenditures separately by categories, and with just a quick
glance I could see how much money went to each one. (Not to mention
the cash back bonus feature!) Now not all creditors offer this
separated category feature, but it is very helpful and I recommend
using one that has it (and ONLY ONE!)
Though unfortunately, during our experiment we also
'discovered' that we were spending money in areas that were not
budgeted - and that was not very pleasant. If we had used cash or made
no effort to keep track of our spending during the year, you can bet
many of those purchases would have been lost in the "where did my
money go" category.
(Now remember if you choose to keep track of your
spending in a similar way, just be sure to pay the bill off each month
when it comes! And if something happens that causes you to not be
able to pay the balance in full each month, then put the credit card
away and use 'cash only' until it is paid off.)
As I've mentioned a few times before, you must know
where your money is going to get a handle on it. Keeping track of
every dime you spend for thirty days is a great start, but you might
want to keep track of it for an entire year. In fact, keeping track of
it from now on is an even better idea! And then if you are
overspending you'll be able to get back on track and regain control.
If you're at all familiar with trying to lose
weight, it sounds like I've just described a diet doesn't it? But
keeping your money in good order does require discipline, goal
setting, and sticking to some kind of plan, just like dieting. If you
don't have goals and a plan for your money you should make them soon,
or you may never know for sure where your money is going each year.
We've been keeping track of our money and adjusting
our lifestyle as needed for many years, in order to create a regular
surplus for the 'unexpected' expenses that tend to come our way. This
does take some effort and planning, but by keeping track of your money
month after month, year after year, you will know what these
'unexpected' expenses are and you will be much better prepared for
them.
These expenses may include but are not limited
to:
Yearly Expenses
* Donations to Ministries, Missions and Charities
* Medical and Dental Expenses
* Insurance; Auto, Renter's, Homeowner's, Health, Dental and Life
* Car Repairs and Maintenance (Including brakes, tune ups, new tires,
etc...)
* Home Repairs and Maintenance (Renew your warranty each year if you
have one!)
* Taxes; Personal Income, Houses and Cars
* Extra Fees; Job, School, Clubs, Outside Activities, Internet
* Vacations and Unexpected Trips
* Birthday and Christmas Gifts (Read my column
Avoid the Christmas Budgeting Blues if you haven't already!)
Monthly Miscellaneous
* Gasoline, Car Washes, Oil Changes
* Cash (Keep track of where it's going!)
* Haircuts
* Clothing
* Magazines, Newspapers and Books
* Coffee, Sodas and Snacks
* Over the Counter Medicines and Prescriptions
* Stamps, Cards and Mailing Expenses
* Film and Photo Developing
* Household Supplies
* Lunches/Dining Out (Including Happy Meals for the kids!)
* Babysitters
* Entertainment/Video Rentals/CDs
(Note: Try trading a few of these for a savings
account!)
Now if your money plan (budget) does not include
these two categories of expenses, you may already be in trouble. Sit
down today and get things straight, don't leave anything out. These
are expenses that are sure to come and when they do you need to have a
plan to pay for them.
Know where your money went last year and where it
will be going this year, that's Living a Better Life!
If you need help setting up a monthly budget, here's
our printable
budget worksheets to get you started, and
instructions for using them.
Michelle Jones, author
of Frugal Family Recipes and Dealing with Debt, is dedicated to helping
families save money and live a better life. She's also a frugal mom of 4
and the Publishing Editor of Living a Better Life: The Free Money-Saving
Tips Ezine. Please visit
www.BetterBudgeting.com to sign up for your free subscription!
Copyright © by Michelle Jones. All rights reserved.
Reprinted with permission.
