Prior to March, i have never actually tracked a full month of expenses to get an idea of what i was spending my money on. I mean ever since last September when I dedicated myself to paying down my debt and becoming debt free, I cut down my expenses by a lot but i did not actually have a figure if you were to ask me.
Around January of this year when i was getting close to being debt free, I think I started to loosen up and spend small amounts of money here and there and I didn’t notice just how much of a difference it made until I tracked my expenses in March.
When I calculated all my expenses for the month versus the income, it was a real smack in the face because I came up with a figure of Net $50 bucks. That is ridiculous, i went from spending like 200-300 a month before to 900 for March. It was a real shocker and I instantly focused on putting together a budget and using it right away without waiting.
The budget that I am using and i modified is from Gather little by little with a free download.
Anyways, I check my bank account and budget each day just to have an idea of what I need to focus on and also any out of the blue charges.
It has actually become really exciting for me with the budget because it forces me to get creative to either bring it more money, cut down expenses or find a free alternative.
Let me actually give you the breakdown I follow for my budget.
Income and then separates into savings, expenses, debt.
Savings 50%, that’s right I am striving to hit that mark, for April I only saved 40% for the first 2 weeks and I hope to hit 50% for the second part but I may need to get creative to bring in more money.
I even spent like an hour or two calculating how many kilometers I drive per month, or at least plan to drive and I calculated a budget for how much I can spend on gas. I came out with a figure to calculate cost per kilometer, so that was a fun exercising because it just showed me how ignorant one can be when not knowing where your money is going to.
Ask the readers…
Do you have any stories of when you started to budget or track expenses?
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Andrew
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The first week we actually sat down to track expenses, we had nearly the exact same experience you did. It was a major wake up call. For this reason I always recommend to my friends that this be the very first thing they do when they start to take back control of the financial life!
Baker @ ManVsDebt’s last blog post..Meet Man Vs. Debt: Updated About Me Page
My husband and I have been tracking our account balances almost every week since a year ago January. It really turned things around for us.
We’re switching to twice a month (after paychecks) now that we’re confident that we will keep up the good work.
Meg from FruWiki’s last blog post..User:Meg
Something I’ve been trying this month has worked out really well for me, I give myself a daily budget and withdraw that from a cash machine every day and that is *all* I’m allowed. I buy everything with cash and whatever cash is in my wallet is free to spend on whatever I want (Bills, etc. all come out of a different account so I can safely forget about them). Never have to worry about tomorrow, as more money will be available tomorrow. Just live day to day on the budget. Ok, I’ve given myself plenty of money per day (£20), but if that works well for me, I can slowly cut back on my cash allowance and increase my savings amount.
Meg, thanks for your comment.
It is such a wonderful thing to see exactly what is happening with you money. I have become addictive to it and actually i get upset if my numbers don’t line up with what my bank account shows.
I may need to end up switching to quicken soon to make the process more manageable and automated.
We have been tracking our expenses since our marriage. We never got surprised
..until recently. How come? We stopped tracking it.
Track it.
Alik Levin | PracticeThis.com’s last blog post..What Your Kid Knows About Creativity
Alik, thanks for your comment.
Thanks for sharing the story with us because we can definitely take something from this, marriage seems to work very well for you since you are both on the same boat in terms of handling money, with budgeting and tracking.
Baker, thanks for your comment.
I totally agree with you, wanting to take control and doing it are two complete different things. I assumed my expenses were low too until I actually found expenditures here, there and everywhere. They were small amounts but lots of them.
Its the, its just 20 bucks, I am almost out of debt so i can splurge mentality, and it cost me for that month. I could have had 500 dollars in savings sitting from that.
The main story I have is that when I did it religiously and carefully, the big insight was that I should have been spending more on food/groceries than I was. I was being cheap with food, extravagant in all these other areas, which was strange to see. Since then I’ve been able to get expenses into better priority. Good for you for having done this again – I’m overdue as well. I should start for the next 30 days.
MoneyEnergy’s last blog post..5 Money Lessons You Should Make Sure You Learn While Still in College or University
Richard, thanks for your comment.
That is a great system you follow, this is similar to the envelope system I have heard of. I have thought about doing that but there are certain things that you just need a credit card for and that process will only shift that way.
Eventually our transactions will be electronic and I totally see people going around and using their cell phones to scan and pay for like your groceries. I think there is talks of this technology or it already exists. Its kind of fascinating but this kind of technology requires lots of discipline to manage.
Moneyenergy, thanks for your comment.
Well you know, you gotta start somewhere with the budget and adjust your expenses.
I spent too much on gas for the car in the first week and had to cut down on traveling by car for the next week and instead got my brother to pitch in for gas, since he drives the car. So I got him to take initiative and get used to paying bills or at least being responsible for something.
Hi Tom,
Whilst I have always accepted the wisdom of tracking my expenses, I am simply too lazy to do it. If I did, I would not doubt find a whole heap of areas for potential cutbacks.
Best of luck with those savings goals for the rest of April.
Andrew’s last blog post..Diligently handing money over to scam artists
Andrew, thanks for your comment.
Well I am not telling you that you must do it, just sharing my experience and one day you will use the budget, it takes time for most of us to adjust.
Thanks, I feel very good about my goals and budget for this month.
Hi Tom
Good on you for taking charge of your money. To have wealth we must know what our money is doing for us. Keep up the good work.
Thank you,
Giovanna Garcia
Imperfect Action is better than No Action
Giovanna Garcia’s last blog post..Chinglish Lesson.
Giovanna, thanks for your comment.
Now I am starting to understand the discipline needed in terms of handling money and building wealth.
It sure is amazing how quickly we can spend money if we’re not keeping careful track. I guess this is why people recommend only using cash – it physically forces you to come to terms with what you do – and do not – have.
I had a similar experience when I started tracking my finances, and like Baker, it’s the first thing I recommend. Just becoming aware of what you’re spending where usually provides a lot of motivation to stop spending!
Alan @ Saving For Serenity’s last blog post..Weekend Review 18.04.09
Alan, thanks for your comment.
The cash system works to a certain extent but look at where the system is heading to now, electronically.
Knowing what I know now in terms of handling finances, I cannot seem to grasp in my mind how others can live with themselves and not have a budget, let alone no savings.