USA   |   UK   |   Australia   |   Canada
ADVERTISEMENT

The first step in any budget: monitoring spending

Just count what you spend for 30 days. Here's how

By Gary Foreman

The New Frugal You
New Frugal You columnist Gary Foreman
Gary Foreman is a former financial planner who currently edits The Dollar Stretcher website and newsletters. He writes "New Frugal You," a weekly Q&A column about frugal living, for CreditCards.com

Ask a question.

'New Frugal You' archive

Question for the CreditCards.com expert

Dear New Frugal You,
I am at my wit's end with my budgeting, or lack thereof. I make enough money to pay my monthly expenses, but I am not sure where the money goes. I should have some left -- or should at least be able to cover my expenses. But I am always in the negative with my bills and having to pinch and scrape to make ends meet. I don't know what to do. I need some guidance. -- Ashley

Answer for the CreditCards.com expert

Dear Ashley,
It sounds as if money is just slipping through your hands. The good news is that you're in a position to stop it.

The first thing is to figure out where your money is going. And the best way to do that is simply to list every expense for one month.

You'll need to include automatic payments from your checking account, automatic payments from your credit cards and debit cards, in-person credit and debit card transactions, online credit and debit card transactions, any checks you've written and cash you've spent.

It's not as difficult as it sounds. Your bank and credit and debit card statements along with your checks will list all but the cash expenses. And, it's a simple matter to list cash purchases on a slip of paper or in an electronic pocket organizer or smart phone.

The next step is to review your bank, debit card and credit card statements. Are there any transactions that you do not recognize? Many of us are in the habit of pulling out the plastic for every $3 purchase. We shop at convenience stores, fast food restaurants and coffee shops. The receipts are scattered in our cars or purses. As a result, we don't know where we've been spending our money.

Once you've collected all your expenses, it's time to analyze them. Some expenses are relatively fixed -- for instance, your mortgage or rent, car payment and insurance. There's not much you can do about them.

Other expenses are much more under your control. Clothing, food, entertainment often cause problems.

Review the statements looking for patterns. Do you find a lot of activity at fast food restaurants? Or coffee shops? Or a series of purchases made online? Maybe for a hobby or pastime?

It doesn't take a "CSI" team to figure out where your money is going. You can do the investigation yourself in the comfort of your home! The patterns you find will identify the problem.

Once you've discovered where the problem or problems are, you'll need to develop a plan to change your habits. Begin by considering why you're making those purchases. Are you paying for convenience? (Think fast food.) Or status? (Are you going to Starbucks everyday?) Or is it just a habit you've developed, such as surfing eBay?

Design a plan to overcome that problem. For instance, planning and preparing lunches and dinners in advance will reduce the need for fast food. Blocking online shopping sites can halt habitual shopping. Whatever the problem is, think of a plan to overcome it.

If you find that you still cannot seem to control your spending, there are a few methods you can use to force the issue. You can look into getting a prepaid card where you load a certain amount of money on it and use that instead of your debit card. Put as much money as you're willing to spend for coffee each week on the card. Any time you buy coffee, use that card to pay for it. When the card runs out, you stop buying coffee. Yes, it could be tough if you run out of money on day four. But you already know the alternative: scraping by at the end of the pay period.

The bottom line, Ashley, is that you need to make a decision to control your spending. The steps to do that aren't too difficult for you. You can do this if you really want to. Please send me an e-mail in a few months and share your success story.

See related: Surviving on a bare-bones budget, Trying to cut spending? Go BIG!, Your first budget in three easy steps, How to fight frugality fatigue, Tips for smart debit card use, A guide to the new credit card statements

For more than 35 years, Gary Foreman has worked to help people get the most for their money. Prior to founding The Dollar Stretcher.com, he was a financial planner and purchasing manager. Gary began The Dollar Stretcher website and newsletters in April 1996. Today the website features more than 6,000 articles on different ways to live better for less. Gary has been interviewed by The Wall Street Journal, The Nightly Business Report, USA Today, Reader's Digest and other newspapers and magazines. Gary answers a question about a budgeting or saving issue from a CreditCards.com reader each week. Send your question to The New Frugal You.

Published: November 11, 2010



Join the discussion

We encourage an active and insightful conversation among our users. Please help us keep our community civil and respectful. For your safety, do not disclose confidential or personal information such as bank account numbers or social security numbers. Anything you post may be disclosed, published, transmitted or reused.

If you are commenting using a Facebook account, your profile information may be displayed with your comment depending on your privacy settings. By leaving the 'Post to Facebook' box selected, your comment will be published to your Facebook profile in addition to the space below.

The editorial content on CreditCards.com is not sponsored by any bank or credit card issuer. The journalists in the editorial department are separate from the company's business operations. The comments posted below are not provided, reviewed or approved by any company mentioned in our editorial content. Additionally, any companies mentioned in the content do not assume responsibility to ensure that all posts and/or questions are answered.

Three most recent New Frugal You stories:

Share This Story




Follow Us!


Credit Card Rate Report

Updated: 10-24-2014

National Average 15.07%
Low Interest 10.37%
Business 12.80%
Balance Transfer 12.82%
Student 13.14%
Cash Back 14.98%
Reward 15.05%
Airline 15.46%
Bad Credit 22.73%
Instant Approval 28.00%

ADVERTISEMENT
ADVERTISEMENT