by Michelle Jones
Do you have a steady source of income each year but are never quite sure where it all went? Let's talk about that. Let's find out where your money went, and how to keep this from happening again and again!
* * *
I call this common financial problem the "I Don't Know Where My Money Went!" syndrome. And it's very common because most people don't like to budget. Well. I'm here to change that!
Though we may be keenly aware of 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 are really not 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 as well as you should.
All the extras, like eating out, entertainment, gifts, medical and dental expenses, car maintenance and repairs, household expenses, etc.
A few years ago my husband and I tried a budgeting experiment and it was quite eye opening. For a period of one entire year we used our Discover credit card for everything, including 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. (Note: More and more credit card companies now offer these features!)
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.
If you choose to keep track of your spending in a similar way, just be sure to pay the credit card bill off each month when it's due so you won't have to pay additional interest. And if something happens that causes you to not be able to pay the balance in full each month, put the card away and use only cash until it is paid off.
As I've mentioned in this column before, you really do need to know where your money is going to be able to manage it well. 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! Then, if you are overspending, you'll be able to get back on track and regain control quickly.
If you're at all familiar with trying to lose weight, it sounds like I've just described a diet doesn't it? Keeping your money in good order does require discipline, goal setting, and sticking to a plan; similar to dieting. If you don't have goals and a plan for your money make them soon.
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 takes 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 unexpected expenses may include but are not limited to:
Donations (non-profits, ministries, missions, charities)
Insurance (auto, home, rental, health, dental, life)
Car repairs and maintenance (oil changes, brakes, tune ups, new tires.)
Home repairs and maintenance (renew warranties if you can)
Taxes (personal income, property, business)
Fees (job, school, clubs, activities, internet)
Travel and vacations
Gasoline, car washes, oil changes
Cash (keep track of where it's going)
Magazines, newspapers and books
Beverages (coffee, tea, soda, bottled water, sports drinks)
OTC medicine and prescriptions
Stamps, cards, mailing expenses
Dining out (lunches and kids meals)
If your budget does not include these 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®!
* * *
Return to Budgeting Article Index
Copyright © 2004 by Michelle Jones. All rights reserved.