Quick follow up to why and how to track living expenses

I asked a friend of mine to give me some feedback on the Why and how to track living expenses post. She’s been working on implementing her own budget, and it’s been working really well for her, so I thought she might have some insights for aspiring budgeters.

Start Simple

She said it can be overwhelming and discouraging if you try to tackle the whole thing at once, so start simple. Maybe focus on one or two areas at a time until you build up to a full-blown, tracking-every-expense, system.

I would suggest picking one of the monthly variable expenses, like your car gas, home gas, electricity, or a particular habit, like Starbucks coffees, and just track that for a few months.

This will let you see how the spending varies from month to month and how much you’re really spending on that one thing. You may be surprised how little it really is, and find out that it’s other expenses that are flying under the radar and blowing the budget.

Also, once you are tracking that one expense, you can see how any changes you make to your habits affect the spending. For example, you might try turning up the thermostat a degree to see if it shaves any off the electric bill. It may be surprising to find out what is and is not worth worrying about.

Cash Is King

For her own budget, my friend has gone with a simple cash budget. She puts a given amount of cash in her purse for the month, and when it’s gone, she’s done spending for the month.

I imagine seeing and feeling how many dollars are left for the month can really put the spending in perspective.

It also hurts to use cash. We know it’s real money, whereas with a credit card, it’s just a swipe. The same swipe that buys a candy bar, also buys a big screen TV. Paying cash for a big screen TV hurts a lot.

Look For Savings

She also suggested to save more money by watching for coupons and sales. Utilize them…but only for purchases you would make regardless. In other words, don’t buy something just because it’s a good deal.

And check your receipts. It’s surprising to me how many times I find errors – usually double charging (scanning an item twice) or wrong pricing (not honoring a sale price, for example).

Why To Budget

Lastly she said

I think the “Why” really boils down to happiness. For me it’s security, knowing I can provide for myself and my future.

And that’s really the key. Tracking and budgeting our expenses lets us know where we are, and where we’re going, so we can feel happy about both.

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