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By | October 11, 2008
Learning to keep track of how much you spend is one secret to financial success. However, you have a potential enemy to financial success right in your purse or wallet; the credit card. Credit cards are extremely useful things. You earn cashback, you earn miles, gift cards to your favorite store and they’re about the most convenient spending tool available. In fact, many stores don’t even require you to sign a receipt anymore. All you have to do is swipe your card and you’re good to go. The downside to credit cards, besides the interest you pay if you don’t pay off the balance each month, is that it is so very easy to lose track of how much you’re spending. Think about the last $100 you spent. What did you spend it on? What about the last $1000? It’s scary to realize you could have no idea where $1000 went – yet most people don’t remember. Even scarier is finding out at the end of the month that you’ve overspent, again, and paying off your card becomes a stressful event. So…where does the money go? If you’re brave enough to find out, and if you feel that your money is controlling you, here’s a quick way to examine your expenses and gain control over your money:—————Begin with the following expense categories:
* Home
* Utilities
* Food
* Family
* Medical
* Transportation
* Debt
* Entertainment
* Pets
* Clothing
* Miscellaneous
* Investments and Savings
* Donations
————————————–
Spend a few minutes reviewing the categories listed. Do they make sense for your lifestyle? What categories can you eliminate? What categories will you need to add? You can find this information by reviewing your credit card statements, checkbook register, and your bank accounts for the past three months. Take a look at each category that is right for your lifestyle and add sub-categories. ——————–For example, under Transportation you might have the following sub-categories:
* Public transportation costs
* Insurance
* Car Payment
* Maintenance—————————–Write down the expense categories and sub-categories, or create a simple spreadsheet. Take a month or two to track your spending using the various categories you’ve determined. This means keeping track of all your spending, keeping receipts and not letting any dollar go untracked. You need to know how much you spend on everything. You need to know where your money goes. The point is to gather information, not to limit your spending or spend less than you normally do. If you normally go out to dinner three times a week, don’t all of a sudden go out to dinner just once a week simply because you’re tracking it. When you’ve completed this experiment you might be surprised to find for example that you spend $1000 a month on groceries and only $100 a month on entertainment, or vice versa. Maybe you’ll find that you spend $1000 on going out to dinner. It is guaranteed to be an eye-opening experience. After careful evaluation, you’ll most certainly find there are areas where you are overspending and can cut back. Learn to keep track of your spending, especially when it seems invisible. Doing this for only a few weeks could be the key to getting on track instead of getting into debt.
Topics: How-To's, Money Matters | 1 Comment »
Comments
October 23rd, 2008 at 2:18 am
In the past, when I felt that my spending was out of control, I would caculate how many hours it would take to purchase the item. It caused me to think differntly about my time and money and if the purchase was worth it.