Budgeting -- ooh, what a scary word! If you want to frighten someone whose finances are out of control, suggest that they tally up their expenses on a piece of paper. We all understand the value of such an exercise, but when it comes to the practicality of putting a budget together, we get cold feet. Budgeting doesn't have to be so painful, when you have a systematic series of steps to follow.
Visit if Tip 1, Tip 2 and Tip 3 if you have not yet read it.
ROOT OUT MONEY LEAKS
Now I guarantee that you will not remember
every expense, no matter how hard you strain your brain! Think about
all of the things that you buy throughout your week without really
paying attention -- snacks at work, a magazine when you stop for gas,
that cup of coffee on your way in every morning. And don't forget about
the expenses you are racking up because of financial disorganization --
interest charges on your credit card debt, late fees because you forgot
to return that movie on time, overdraft charges because you didn't
balance your checkbook. All of these fall into the category of
unconscious spending. You just do it because it's a habit. And although
you think that a dollar here or fifty cents there is insignificant, it
can really add up.
So for a month, record every penny that leaves
your hand, in the form of a check or cash or a credit card transaction.
This may sound like a huge challenge, but you can do it! Make it
convenient -- my husband stuck a small pencil and piece of paper in his
wallet so he would be reminded to make a note every time he made a
purchase. You will be stunned when you see where your money is really
going! My husband was shocked to find out that he was spending almost a
hundred dollars a month on that morning coffee (am I picking on
Starbucks too much?!) What's your vice -- eating out when you are
feeling lazy? Buying every new CD or magazine that comes out? I'm not
suggesting that you completely eliminate these habits -- just that you
decide how often you can reasonably afford to indulge and still reach
your other financial goals.