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Do you have enough money to meet your expenses? Or do you find you have to reach for that credit card because you ran out of money? Using a credit card for necessities is a warning sign. Get a handle on your cash flow! How much do you have in income? What are your basic expenses? What are you spending each month on the extras, the things you want? Track your expenses to control the flow. It’s the only way to avoid trouble with debt. Plan your spending so you don’t have to rely on credit cards for the things you need.
It’s the little things that tend to add up fast – the many snacks during the day, the late night pizza orders, or the multiple cappuccinos. In fact, did you know an inexpensive ($2.70) snack of chips and soda five days a week can add up to $702 by the end of the year! Frequently it’s the little things that add up without our notice. As a result, we never know how to do it different.
The Case of the $702 Snack
Extras That Add Up
Steps to Control the flow!
Most people aren’t aware of where their money goes. But this information is essential if you want to make a plan for your money. Use the Tracking Income and Expenses to write down your income and expenses each day. You can ask for and keep all receipts throughout the day as a way to remember what they are. Put your tracking sheet on the refrigerator or another visible place. This will act as a reminder to keep daily receipts and to total your weekly expenses.
At the end of the week, organize the above receipts in savings and expense categories. Total these for each category and write the weekly total for each category on the Monthly Expense Chart. If a spending category doesn’t apply to you, cross it out and replace it with one that does apply. If you need more room for savings (on the bottom), use an additional piece of paper.
At the end of the month, total each savings and expense category. Then add the totals of each expense category (including savings category) to get the "Monthly Grand Total of Expenses." At this time, disregard the "Planned Amount" column.
Once you have tracked your expenses, gathered information about your income, you are ready to control the flow.
After adding up expenses, and comparing to your income, look at how you are doing? How does your cash flow? Are you spending more than you are taking in? If so, do you use credit cards to make up the difference?
WARNING WARNING WARNING
This habit can get you in a lot of trouble.
Instead, readjust your expenses so they are within your income. Find ways to decrease spending, and still have the things you want. Or maybe you did live within your income, but realized lots of money went for things you didn’t care that much about. You can adjust your spending to better reflect your values. Now is the time to fill in the “Planned Amount” column for the following month. How will your spending change?
Live within your means
http://pubs.cas.psu.edu/FreePubs/pdfs/ui323.pdf
Control the flow! Come up with a plan that YOU feel good about. If you find out that $6 or $9 a day ($2340 after a year – and that’s only five days a week!) is going for coffee or soda, figure out how to reduce this cost to meet the goals most important to you.
We all have a few “black holes” where money seems to disappear. Tracking your spending will help you discover the holes, and plug them up. Are you aware of your “black holes?” The worksheet The Case of the Disappearing Dollars lists some of the most common. Commit to changing just one, and you’re on your way to becoming a millionaire.
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The Monthly Expense Chart has the category “savings” on the bottom. By using the Goals Worksheet, you can identify a particular amount you want to save a month towards a purchase or trip or to pay off that credit card.
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