Keeping Track Of Finances The Old Fashioned Way
A good way to save money is to keep track of the money you do spend. This seems fairly obvious, but you’d be surprised how many people do not tabulate their daily, weekly, or monthly expenses. Before you know it, you can’t pay your rent and you’re taking out a loan in order to pay for your groceries. This could have been avoided by simply being aware of the money that’s in your bank account.
Whats interesting is that money mismanagement actually seems to affect working people more than the unemployed, as unemployed people tend to be more aware of the money in their account, down to the last dollar. Working people tend to think that with their bi-weekly influx of money, they no longer have to worry about their spending habits. Yet, it’s pretty well established that many Americans live at the edge of their income and often fall into debt in spite of a high income. Why? Excessive spending? Well, yes. But more to blame is a failure to track finances.
There are a number of software programs and mobile apps that can help you add up and archive your expenses but sometimes the best way to do it is the old fashioned way. Get a big dry erase board calendar or make your own (your first savings of the day). Start by tabulating how much money you make everyday. Go ahead and deduct taxes. This gives you a truer picture of your take-home income. Next, on a day to day basis, keep the receipts of every dollar you spend. At the end of each day add them up and write how much money you spent. To the right of that number write how much money you earned that day. Hopefully, the number on the left is considerably smaller. If on a consistent basis it’s not, you’re probably in debt.
Assuming the number on the left is smaller, you must next add up the costs of your monthly bills—including cell phones, car insurance, credit card, groceries, utilities, rent etc—and then divide by thirty. This will help you determine how much money per day you must spend on the cost of living. Once you have this number, add it to the number on the left. This is how much money you actually spent that day. It’s probably not so much less than the number on the right now. This will give you an illustration of how much money you actually save each day. From there you can begin to tweak your discretionary spending.
Finally, especially now during tax season, you might want to take some time to confirm that you did your taxes properly. Take a quick peek at the 2011 tax brackets and your withholding to see if you’re paying the right amount. If not, start saving now as part of your budget so you don’t get a shock in April.
Finances, whether it’s the old fashioned way or not, is about planning and preparation.
