So, I have a confession to make. My spending has been a little out of control lately. I haven’t been paying much attention to my spending or budget, and the effects have manifested itself in our bank account. I don’t really have an excuse for this, but I do have some things to save and prepare for, so I’d better get my act together. One of the best budgeting tools that I use is to simply spend consciously.
What does that mean? It means that I pay attention to where my money goes. It’s really that simple. I strive to not be at the end of the month and say, “What did I spend my money on, anyway?” I strive to come to the end of the month and say, “I’m glad that the money went to this or that place.”
How do I spend like this? There are several steps to this, but they’re really simple.
- Write down (or otherwise record) every penny of outgo. This is simple, but really effective. Write down everything. Everything from the mortgage payment to the $.25 for the gumball machine. This is a good beginning to an eventual budget because you will get an idea (and probably be surprised) of where your money actually goes. The first time I did this, I was blown away by the amount that we spent on food. Food costs were quickly cut just because I knew that I could do better than the astronomical amount that we were spending. This is probably the most effective step.
- Make a goal. You’re saving for your dream house, or your child’s education, or a car. Maybe you’re saving to help kids or unwed mothers in Africa. Maybe it’s something small like getting your eyebrow pierced, or you want the newest gaming system, or you want the Coach handbag in the store front window. It doesn’t matter. Just make a goal and write it down. You need this so that you have a reference, a reason to possibly walk away from some of the unnecessary things that you have been buying.
- Ask yourself if you really need/want the item that you are looking at in the store. This is where having a goal comes in handy. If you have the goal, then you have something to reference to. You can say to yourself, “Do I want this double-stuffed-shaken-upside-down-mocha-latte or do I want to pierce my eyebrow?” The choice is ultimately up to you, but if you have a goal and a plan, then you have a reason to forgo some of the little stuff that adds up. You can even use delayed gratification. Trent Hamm over at The Simple Dollar has made up what he calls the Thirty Day Rule. Basically, if you see something that you like, leave it on the shelf for at least thirty days. If you still want it after thirty days, then go ahead and buy it. Otherwise, you will have forgotten about it and saved your money.
So, that’s it. It really is a simple, if sometimes time consuming way to do things, but it is the best way to find out where your money is going. If you do it for a month or 90 days, you can use the information to start a budget and ferret out places to cut back. The important thing is not whether what you spend your money on is frivolous, necessary, or somewhere in between. In important thing is knowing and therefore valuing what you spend your money on.
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