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From the time I got a job when I turned the 16, I always kept track of my spending. I knew exactly where my money was going and how much I spent on certain things. But I know not everyone is of the mindset or has the patience to record every single purchase, right down to the pack of gum or coffee on the go. I’m sure there’s even a handful of people out there who, when withdrawing cash from the ATM, neglect to look at the receipt or balance on the screen because they just don’t want to know. Tip of advice…start looking! Start wondering and watching and be proactive in your spending habits!
I’m not even saying that you need to cut out these small purchases (unless they’re really causing you go further in debt or they are causing your budget — if you have one — to scream red). Simply KNOWING where your money goes is the first step to becoming more aware and willing to change and possibly live a healthier financial life.
Getting a cappuccino on the way to work every morning may not seem like a big deal. Say you only spend $5. That’s $25 a week (work days only), or $1325 per year! Looking at it this way really puts it into perspective for you, huh? That $5 per work day may not seem like a deal breaker, but knowing that over the year it adds up to what (for me) is over 2 months worth of rent may influence you to change your habit.
You probably know your fixed expenses (those that don’t change, like rent or car insurance), but are you aware of your variable expenses (those that may fluctuate from period to period such as utilities or groceries or leisure)? Do you take into consideration the occasional expenses such as gifts or auto registration fees? All of these in conjunction with one another are what make up the expense portion of your budget, and not taking them all into consideration can cause you to ill prepared for when something pops up down the road. Don’t have the money to pay for your auto registration? That may throw a $50-$100 stone into the budget.
Knowing where your money goes is important. Ignoring it over time will only make it harder and harder to get a grasp on things. Get a handle on it now. Make a difference now. Make choices and change habits now. This is your future we’re talking about. The things you do in the present are most definitely affecting how you will be able to live your life in the future.
