Many people do, and it’s usually because they don’t know where the “money leaks” are.
Thus, the first thing you should do is see where your money is going each week, each month, each year. Keep a careful record of expenditures, both by check and credit card, and by cash.
If you put a notebook in your pocket or a piece of paper in your wallet and actually record every expenditure, you may be surprised at what you learn!
If you find money leaks – and you probably will – there’s one way to plug them. With the exception of fixed expenses like the mortgage payment, the power and phone bills, and your credit card payments that have to be made by check, begin using cash.
One day not long ago I was at the check-out counter at the grocery store, visiting with the cashier as usual. I said something about buying more than I had written on my list. About that time the woman behind me, who had about 3 items in her hands, spoke up.
She said “That won’t happen if you always pay with cash. You can only buy as much as you brought money for.”
She was right! If you plan your purchases and take along enough cash to cover them, you won’t be tempted to make those impulse purchases that eat holes in the budget.
Along with day to day expenses and your monthly bills, you need to allow for savings, and for annual and semi-annual bills. If you overlook the fact that your car insurance is due in July and don’t set aside the funds, it can be cause to go further into credit card debt when you write one of those handy “cash advance” checks to meet the payment.
Also, you need to budget in a little fun and enjoyment.
Unless there is absolutely NO money left at the end of the bills and the groceries, you need to allow yourself some small rewards in life. Just cut back on them a bit.
If you love eating out or going to movies, put it in the budget, but do it less frequently. If you love new clothes, set aside an amount that you can spend each month, and then shop until you find something perfect with that sum, rather than buying something that merely catches your eye.
The trick with budgeting is to create a plan that you can actually live with. If you’re too restrictive, it won’t last past the first two weeks.
Author: Mike Clover
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