Like trying to hold onto a handful of water, money has a way of magically disappearing right before our eyes!
Has this ever happened to you? It's Friday. You stop by the ATM on your way home from work and get out cash for the weekend. Without much detailed calculation, you punch up a number which is far more than enough.
It's Monday morning, and the kids need lunch money. You scramble through your pockets and come out with $1.83. Where did all that money go?
I believe that most of us live in a financial fog, having only vague notions about how much available cash we really have, how much we owe and how much we are spending each day. It's like eating peanuts. Before you know it, the bowl is empty.
We like to hold our spouses and children accountable with, "I just gave you $20 yesterday. What did you do with it?!" Or the famous parent-to-child query: "What happened to the 10 bucks I gave you last night? You think money grows on trees?!"
Would you like to know where all the money goes? You can. It's simply a matter of breaking an old habit and learning a new one.
BAD HABIT TO BREAK
Coma Spending. (Co-ma: n. A condition of profound unconsciousness.)
Pretty much self-explanatory. Coma spending includes writing checks willy-nilly, spending coins and currency, and using credit cards, debit cards and any other way you can think of to spend money.
GOOD HABIT TO LEARN
Record all spending. This means writing down the amount of every expenditure.
Psychology tells us it takes 21 days to break or create a habit. So, if you start this new program tomorrow morning, in just three weeks, you will have already begun to completely revolutionize your personal finances.
First, commit to carrying a small notebook or paper with you at all times — in your pocket, purse or wallet. At the top of the first sheet, write tomorrow's date. As you make any financial transaction during the day, write down two things: 1) What was it for? and 2) How much did it cost?
For this to work, you have to write down everything to the penny. You don't need to make a scene or any explanations. This is a very private and dignified thing you are doing. You're going to feel a little stupid at first, but not as stupid as you do when you can't figure out what happened to the $100 you had last Friday night!
At the end of the day, put this page of spending in a drawer or a safe place, and start with a fresh sheet for tomorrow.
At the end of the week, use the daily records to tally up a record for the week. Look through your daily records, and come up with 10-15 categories, i.e., fast food, clothes, groceries, electricity, gasoline, insurance, flowers, parking, car wash, etc. Using your daily records, fill in the exact amount you spent in each category, and then come up with a week's total. Be sure to include all items for which you write checks.
Put this weekly record away, and repeat the same process for the next week. Continue until you have a whole month's record, divided into four weeks.
Slowly, you are going to get a very clear picture on the exact amount of money you are spending.
That's all there is to this first big financial step. Consistently and honestly, keep a written record of every expenditure, no matter how small. You'll be more successful if you make your written entry right at the time the transaction is made. Don't think you can just "remember" and fill it in at night. You can't, and you won't.
Start keeping a spending record now. Don't put it off. It is not nearly as burdensome as you might think.
Would you like more information? Go to EverydayCheapskate.com for links and resources for recommended products and services in this column. Mary invites questions, comments and tips at EverydayCheapskate.com, "Ask Mary." This column will answer questions of general interest, but letters cannot be answered individually. Mary Hunt is the founder of EverydayCheapskate.com, a lifestyle blog, and the author of the book "Debt-Proof Living."
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