Tracking Your Budget
Nothing is writen in stone and therefore needs to be adjusted periodically.
Strategies Anyone Can Use
No one can deny that creating a budget can help you to manage your money better, especially when it comes to saving and investing for the future. Tracking a budget can reinforce your progress and its actually nice to see investments grow while expenses are maintained at a sustainable level. Budgeting involves not only organizing monthly fixed expenses, but also tracking your everyday spending.
When you have a clear picture of where your money goes each month and how much you can plan much better and create a better savings plan. The key is tracking, tracking every time you spend money and a spending log can help you with this. Keeping an expense log goes beyond the standard monthly expenses. You need to know how much your are spending on gum, donuts, coffee, bottle water, chip, fast food, parking, toll fees, and so on. It's the expenses that can often be small, but do add up to hundreds of dollars each month.
Efficient tracking of your budget means tracking where all of your money goes each day, week and month even the $1.49 bottle of soda. Often it is the incidental expenses that wreck a budget leaving you to wonder where your money went. When you first set out to determine the amount of money you spend each month and on what, keeping a spending log will really help. Write down how much you spent, on what and the date. Three simple things, that's all.
At this point you might be wondering, why should I? Simple and best explained in an example. This is based on a true case: A man liked chewing gum. He would buy it through vending machines, at convience store, supper market, and just about anywhere else. He claimed a pack of gum wasn't that much, and it wasn't, so it really couldn't be that big of an expense. He began to track everytime he bought a pack of gum and how much he spent. Then at the end of a month he added it all up it came to just over $40 a month or $518.64 a year. That's a lot and he stopped chewing gum altogether putting that money toward paying down his debts that much faster.
We often spend with thought or regard to the amount of money being spent because it is done is such small increments. This is referred to as "nickel and diming." You are spending your ability to get out of debt or build wealth in very small amounts which add up to very large amounts. In the example above, the man had literally spend a small fortune, $12,000, before he stopped chewing gum. In other words, making very small purchases, .75 cents here, $2.00 there, and one day your wallet is empty and you're broke.
If something as seemingly inexpensive as gum can add up to a small fortune just think about all the other items you buy when added up add up to an even greater fortune. So many people think nothing of downloading songs for less than a dollar, but when added up end up a fortune, your personal wealth, spent. Gone. So, tracking your expenses by recording every expense you have will open your eyes and hopefully you'll make wiser decision along the way.
If small amounts can drain away a small fortune, small amounts can build a fotune too earning you compound interest.
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- Wealth Defined
- Not a definition many people would consider.
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