Where does your money go?
By LSS Financial Counseling
Have you ever been broke at the end of the week and asked yourself “where did my money go?” If so, it’s likely because you don’t have a budget. Or if you do, it’s because you’re not sticking to that budget.
If you haven’t yet set up a budget, the best place to start is by tracking your spending.
It’s difficult to plan if you don’t know where your money goes &/or how much you’re spending on a particular expense.
Set up a budget
Look at your tracked expenses.
Fill in the easiest ones first aka the amounts that will likely be the same or very close to it, such as mortgage/rent, utilities, food, gas, installment loans/credit cards, etc.
Then, do your best to estimate the variable expenses like clothing and entertainment.
I’m including a second step for your budget because if you are not realistic, you’ll set up yourself for failure.
Also, be sure to plan for quarterly, annual, or other on-going expenses that you don’t pay monthly.
Sometimes these are the forgotten expenses that lead to busting your budget, i.e. vehicle tabs, vet bills, oil changes, and any other periodic expenses.
Stick to it
Once you’ve set up your budget, try to stick to it as best you can. If you’re one of those people (like me) that if you have cash, it’s gone in a day then don’t keep cash on hand.
Or the opposite if you spend more with a debit card because you’re not seeing the physical money going away, then stick to cash
Consider trying the envelope system where you spend only what you set aside for a particular expense. When it’s gone, then you’re done spending.
Don’t give up
If you found that you didn’t stick to your budget and overspent a little, just don’t give up. Troubleshoot along the way and figure out what your overspending triggers are and go from there.
You may need to track more spending and then make budget adjustments as you go because most people’s budgets vary month to month.
Set up savings
According to an article on NPR, 47 percent of Americans don’t have enough savings to cover a $400 emergency and having a safety net is what can keep you from going into a financial crisis situation. So be sure to build emergency savings in your budget.
Also, having money set aside for non-monthly or periodic expenses helps avoid a temporary budget crunch.
Unfortunately there’s not a quick fix, but you can do it by putting in a little time and effort.
LSS Financial Counseling provides an interactive conversation with the public about financial topics at senseandcentsibility.areavoices.com.