I am back with another post in my series for people who are in serious need of a personal finance make over.
If your finances are in trouble, it is because a simple equation is out of balance. You are spending more than you can afford. As a result, you are in debt, unable to save or, perhaps, unable to pay all of your bills on time.
To get back into balance, you need to spend less (or make more, but for now, let’s talk about spending less).
I missed last week, since we were under the weather around here, so by now, if you are playing along, you should be two weeks along with writing down everything you spend money on. (That was the tip from two weeks ago.)
If you look at your list, you should start to see some areas stand out as trouble spots.
Here are a couple indicators of potential trouble spots.
One indication is when an area of your budget looms much higher than the rest. This might be unavoidable (ie housing), but it might be indicative of a trouble spot that needs some reining in.
Another indication is a recurrent expense. There are very few mandatory expenses that show up frequently within a 30 record. Most times, these expenditures can be cut back.
I am sure there are more, but that is a good place to start.
You should still continue to log all money spent for a 30 day period, but it is good to start your analysis now. It is never too soon to start making changes.
Here are a couple of common examples.
1. You notice that Starbucks shows up 4 days a week. Do you really need to stop 4 days a week? While you might not be ready to cut it out completely, you can cut back.
2. You notice that you spend money on buying lunch every day. Could you start bringing lunch from home a few times a week, or even every day?
In this process of getting control over your finances, you must stop thinking, it is only a couple of dollars, and start thinking, every dollar counts.
It adds up.
And when it comes to your personal finances, it is a zero-sum game. Every dollar you do not spend is one more dollar you have to save, pay down debt, or invest.
Continue to look at your budget and think about areas where you can make some cuts to your frequent expenses.
Get creative.
Do you spend a lot on video rentals? Consider shopping around for a better deal. Or borrow movies from the local library.
If you need suggestions for a particular spending habit, do an internet search for suggestions, or ask me in the comments or by using the contact form.
Next week, I will take a closer look at a common budget buster, when I present some simple ways to cut your grocery budget by as much as hundreds of dollars per month.
