Tag: budget

Do You Know Where Your Money is Going?

Do you know where is your money going? Do you know where you are spending every dollar? If I were to ask you how much money you spent last month eating outside of your home, for example, could you give a specific answer?  

If you cannot answer specifically, to the dollar, you could manage money more effectively by knowing where it is going, where it is being spent. 

And once you know, you can make adjustments to your spending and live within your means. And it’s just good to know.

To do this you need to keep track of where you are spending your money. 

How do you keep track of your spending

There are several ways that you can keep track of where you are spending your money. 

A lot of people use debit cards for their expenses and if you are one of them, you could keep the receipts of all your expenses and write them down once a week or so.  You could record everything in your check register as you purchase items. Some banks are now including a place in the check register for writing down debit card transactions.

You could use a financial app to keep track of your transactions or a spreadsheet, or even a piece of paper in a notebook. I currently use an app to track all of my expenses.

Whatever you decide to use, remember, the goal is to track your spending – use something. Try something and see if it works. If it does not work, try something else. 

Remember, you cannot manage your money effectively if you do not know where it is going. 

Knowing where your money is going and the spending plan

Too effectively manage your money, it really helps to have a spending plan. 

In creating a realistic spending plan, the first step is to know where you are spending your money and tracking your spending. After you track your spending, and you get a way or history of how you spent your money last week; last month; last year.  That history helps you develop your spending plan for this week; this month; this year. 

All a spending plan is an estimate of how you are going to spend your money…the better the estimate, the easier it is to stick to it which is critical when working with a spending plan.    

Additionally, in working with a spending plan, once you know and realize that you are spending too much money eating out, for example, you have a starting place to change that habit or behavior and decrease spending.  As you begin to see where your money is being spent and where its going, you will find areas in your spending that you can cut to help you meet your goals.

Final thoughts on knowing where your money is going

knowing where your money is being spent gives you control over your finances and giver you peace of mind about your financial situation.

When you know where your money is going and you are using a spending plan, you are more likely to manage your money better. You are telling your money where to go, and it is going and doing what you want it to do.

It’s working for you and not the other way around. As it should…its your money. Like this post and share this with others that may benefit. Contact me if I can help you create a winning spending plan.

Inflation and Your Spending Plan

Inflation worries are everywhere as you cannot listen to the news without hearing the word inflation. What does it all mean for your spending plan or budget?

Inflation fear is everywhere. Prices are rising higher and higher and, you cannot listen to the news without hearing the word inflation. Inflation and your spending plan, what does it all mean?

What Is Inflation?

Inflation is the decline of purchasing power of a currency over time. It’s reflected in the increase of an average price level of a basket of selected goods and services in an economy over time.

The rise in prices, expressed as a percentage, means that your dollar buys less than prior periods.

Inflation can raise the value of tangible assets like personal real property and erode the value of cash holdings.

What Causes Inflation?

An increase in the supply of money is the root of inflation, and this can play out through several different mechanisms in the economy. However, in all such cases, the money supply increases and your money loses its purchasing power.

Working With Inflation and Your Spending Plan

Below are some tips to help you stay with your spending plan during times when your money loses some of its purchasing power. 

Create a Spending Plan

One of the best ways to beat inflation is to get on and stick to a spending plan to ensure you are paying attention to how much you are spending.  

This will ensure that you are watching what you spend, and only spending what you plan to spend. Regardless of how inflation affects the cost of something, like gas.

Be sure to set spending plan limits for things inflation might affect, such as clothing, food, gas, and housing.

Allocate your money at the beginning of the month, and then stick to the spending limits you have set.

Be flexible by adjusting spending amounts between budget categories if need be but resist the urge to dip into emergency savings and other funds. 

Your spending plan will help you determine your spending priorities. And your spending plan priorities will help you decide what items are the most important for you to spend money on and which you can pass on. 

Look for Cheaper and Free Alternatives

You can beat inflation price increases by looking for alternative and less expensive store brands. Additionally, using coupons and shopping at bulk stores can help you save money on your spending plan. 

Consider cutting out unnecessary expenses like the gym membership or your daily coffee if rising prices are eating into your spending plan.  

Explore free and cheaper things to do in your area to help beat inflation. You could take advantage of free shows and events, and some museums that offer free admission. 

Choosing to rent a movie and stay in and cook a meal instead of eating out is always cheaper.   

Remember Your Priorities

And always keep your financial priorities and goals top of mind. 

Do not overuse credit cards and pile up debt during inflationary times that you will have to take care of later.

Additionally, if you are saving or investing your money, continue to save and invest.  Always pay yourself first. 

What are some ways you beat inflation in your spending plan?  Comment on this and let us know.  Contact me here if I can help you with your spending plan.

When Finances Become a Source of Stress

When stress is getting you down, take a moment to reflect on all the things you appreciate in your life, including your positive qualities and gifts. This simple strategy of gratefulness can help you keep things in perspective.

Most of us have financial obligations or expenses that we must take care of.  Some of those include rent or a mortgage, maybe a car payment, credit card payments, and other needs such as clothing, and recreation.  Sometimes these obligations can become stressful and this stress can lead to anxiety, depression, and other physical and behavioral problems.  It’s important to take care of financial stress before it takes a toll on you and your family.

What Causes Financial Stress

Certain situations and circumstances can shake up finances and can lead to a major change in our finances and thus financial stress. 

For example, finances may be affected by a job loss or maybe a bad year of sales if you work on a commission.  Other major changes include a new baby, separation, divorce, or the death of a family member. 

However, financial stress can affect a family at any time and therefore, you must be able to recognize and manage it. 

Learn to Recognize

How do you recognize financial stress?  You have to learn the signs and signals. Your true sources of stress are not always obvious, and it’s all too easy to overlook your stress-inducing thoughts, feelings, and behaviors. 

For example, you may know that you’re constantly worried about being able to pay bills on time.  However, maybe it’s your lack of organization, rather than not having the money to pay the bills when they are due, that leads to stress.  Hence the importance to sit down and work with your money and bills consistently.   

Some signs of financial stress include: 

•Frequent worry or arguments about money

•Spending more than you make and using credit cards to make everyday purchases

•Only making minimum payments or making payments late

•Feeling overwhelmed by debt

If you are experiencing any of these, it could mean that you are experiencing financial stress and it is time to start managing that stress. 

Manage Financial Stress

Managing financial stress begins with identifying the sources of stress in your life. This isn’t as easy as it sounds.  

The ultimate goal is a balanced life, with time for family and work, relationships, relaxation, and fun – plus the resilience to hold up under pressure and meet challenges head-on. 

Talk about the situation and explain to family and children how things may and how they can help turn things around.  Keep up routines and keep life as normal as possible.  So, as a family, eat together and do other things together whenever possible.  Focus on the positive and know that your situation is temporary, and you can make it better. 

When stress is getting you down, take a moment to reflect on all the things you appreciate in your life, including your positive qualities and gifts. This simple strategy of greatfulness can help you keep things in perspective.

 Keep in mind that your children learn how to cope with stress by watching you. 

Create a household spending plan or budget.  This is the first step toward making it better and regaining control of your finances.  Track your expenses and know where every dollar is going.  In tracking expenses, you will begin to see ways to reduce expenses and save money.      

If your financial situation is stressing you out, recognize the causes of stress and begin to manage that stress.  Take charge of your finances and take charge of the stress. 

How Healthy is Your Financial Behavior?

For example, daily coffee at $4.00 a day at 5 days a week, 52 weeks a year is $1040.   Suppose you save that money, what could you do with $1040?  A mini emergency fund perhaps.  

Financial behavior is the human behavior that is relevant to money management. It is how you manage money and can be healthy or unhealthy.  

If you do not have one, creating a spending plan or budget is good financial behavior that can lead to better financial management. 

The unhealthy can help us lose track of our spending plan. Avoiding unhealthy financial behaviors can reduce financial stress and help you to win with your finances.   Below are some unhealthy financial behaviors to avoid: 

Carrying a balance on a credit card.  Carrying a balance on a credit card is unhealthy financial behavior.  A balance on your credit card can cost you significantly in interest payments, as well as affect your credit score. 

I know this blog is about your spending plan and not credit, per se, and a little off-topic.  However, credit is nonetheless important in the family finance discussion.  We may talk about credit more in the coming months.   

Thirty percent of your credit score is based on the balances you carry, so it is important to pay the balance down by either paying it in full or paying more than the minimum due each month. 

Additionally, this will minimize the expense of using credit. 

If you are paying your balance in full each month, focus on making sure you’re not missing out on all the benefits your card offers. 

If your credit card company charges annual fees, make sure the benefits (rewards points, cashback options, gas rewards, or frequent flier miles, for example) outweigh the cost of those annual fees for you. 

Bankrate.com is one site that offers comparison for credit cards based on rewards, fees, interest rates, balance transfers, cash back rewards, and many other features or terms.

Purchasing single-serve items.  Are you in the habit of purchasing a daily coffee from the coffee shop or snacks and soda from a vending machine?  It does not seem like much but over time these small expenses can add up. 

For example, daily coffee at $4.00 a day at 5 days a week, 52 weeks a year is $1040.   Suppose you save that money, what could you do with $1040?  A mini emergency fund perhaps.  

As you can see, it may be more cost-effective to purchase items in bulk and then make your coffee at home.  Do the same with soda or snacks.  What other ideas or tips do you have for a grocery spending plan? 

Do nothing.  After reading these tips take some action.  Brainstorm ideas set some goals and apply what you’ve read.  Hopefully, you’re ready to apply some of these tips to your situation.  Maybe you still have questions or would like to research more financial tips. 

Maybe you feel like you need to speak with a financial coach or counselor. 

What is important is that you understand that you can improve your financial health and start taking steps in that direction.  The sooner you take action to improve your financial health the better.

Are some of your financial behaviors unhealthy?  Take a serious look at them and determine if they are.  The first step in solving a problem is finding the problem.  These are just a few tips.  Can you think more?

How to Stop Leaks in your Spending Plan

Spending is a leak once you realize how much you are spending, and the purchase feels that it is not worth the money.  For example, you may not appreciate how much you spend eating lunch out every day until you track your expenses and then realize the amount of money you are spending weekly or monthly on lunch.

Does it seem that you never have enough money to buy the things you would like to or need for your family?  If you answered yes, you may have some leaks in your spending.  That means you are spending money without knowing where it is going. 

This can be a serious problem that can threaten your financial security.  And stopping leaks in your spending can help you get more of those things that you want for your family. 

There could be many reasons for the leaks but learning to recognize some of them may help you plug the leaks.

Do you keep meaningful records of where your money goes?  Keeping track or keeping a record of your spending will show where your money is being spent.  From this record, you can decide whether you should make changes to your spending plan and exactly what changes to make. 

For example, as you keep a record of your spending, you will begin to see areas that you will be able to cut back on or eliminate. 

Spending is a leak once you realize how much you are spending, and the purchase feels that it is not worth the money.  For example, you may not appreciate how much you spend eating lunch out every day until you track your expenses and then realize the amount of money you are spending weekly or monthly on lunch.

Do you plan to spend your money?  Planning to spend your money can be well worth the effort.  That’s because it can help you spend your money wisely rather than letting it disappear without a trace. 

Start with your income, and then write down your spending categories and how much money you will allocate to each one.  With careful planning, you may begin to get many of those things that you want for your family.

Do you live within your means?  Living within your means says that you are not spending more than you can afford or more than you make. 

If you are living within your means, you are spending money wisely and not using credit cards for everyday expenses.  If you live within your means, you won’t need to use credit cards and loans for everything.    

Do you buy only what you need or use?  Buying in bundles or buying more features than you need or use will slowly drain your spending plan. 

Remember, little expenses add up. 

If you are not watching those extra channels on cable or using your TV or movie subscription service like Netflix, or using extra features in your phone plan, consider scaling back to what you do use to cut down on cost.   

Do you plan your shopping trips?  Before heading out to the store, take note of what you have and what you need.  Try not to shop when you do not need anything, going shopping when you’re bored, or going shopping to kill time. 

Have you ever walked into a store to get one thing and came out with a cart full of merchandise?  Were all these items necessary?  How will this purchase affect your budget? 

When you are going shopping, making a list beforehand and stick to the list.  Sticking to the list will prevent you from going over your budget and making unnecessary purchases.

Stopping these leaks in spending will help you purchase some of the things you want for your family.  Additionally, by tracking your spending, you will begin to see areas where you will be able to and where you can save money by cutting some expenses.  Subscribe to my blog here and get more practical tips to help you plan your spending.