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, 2008 |
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Living a Better Life Not Sure Where
Your Money Went? * * * I refer to this common financial problem as the empty hole called "I don't know where my money went!" And trust me, it is very common because most people don't like to budget! And I'm here to change that!! Though most of us know 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 may not be 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 like eating out, entertainment, cards and gifts, medical and dental expenses, car maintenance and repairs, household expenses and so on. A few years ago my husband and I tried an experiment and it was quite eye opening. For a period of one entire year we used our Discover credit card for everything, even 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!) Now not all creditors offer this separated category feature, but it is very helpful and I recommend using one that has it (and ONLY ONE!) Though unfortunately, 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. (Now remember if you choose to keep track of your spending in a similar way, just be sure to pay the bill off each month when it comes! And if something happens that causes you to not be able to pay the balance in full each month, then put the credit card away and use 'cash only' until it is paid off.) As I've mentioned a few times before, you must know where your money is going to get a handle on it. 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! And then if you are overspending you'll be able to get back on track and regain control. If you're at all familiar with trying to lose weight, it sounds like I've just described a diet doesn't it? But keeping your money in good order does require discipline, goal setting, and sticking to some kind of plan, just like dieting. If you don't have goals and a plan for your money you should make them soon, or you may never know for sure where your money is going each year. 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 does take 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 expenses may include but are not limited to: Yearly Expenses Monthly Miscellaneous (Note: Try trading a few of these for a savings account!) Now if your money plan (budget) does not include these two categories of 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! If you need help setting up a monthly budget, here's our printable budget worksheets to get you started, and instructions for using them.
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Copyright © 2004 by Michelle Jones
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