So in the spirit of budgeting, the first thing I needed to do was get an idea of where all my money goes. I mean I make pretty good money, it’s not a ton, but it’s a lot more than I did years ago. So why do I still mostly live paycheck to paycheck? Well, because I don’t budget. I don’t pay any attention to where it’s all going-and that’s a problem.
Most banks allow you to go in and categorize your spending, so that’s what we’re going to talk about today. My online account allows you to simply click on a transaction and put it in a group and even add notes about it so you don’t forget what it was for. That’s where we start, and you should go ahead and log into your bank account and start categorizing.
I did a test period of 45 days-from February 1st to March 17th, and now this period included my tax return so I’ve removed the amount of the return and the (rough) amount of it from both my payouts (I paid off a bunch off all of my credit cards and a few other things with it) and my income to make this more like a normal amount of time. I even went through my credit cards to see how much I am charging.
For this period, I spent/paid out roughly $4,108.45.
For this period, I charged/went in debt roughly $1,649.52.
For this period, my income was roughly $3,526.21 (not including income from blogging.)
See the problem? Why on earth am I spending so much MORE (roughly $2,231.76 more) than what I’m earning? This is how we end up with credit card debt-and yes I paid it all off and already have a good chunk of it again. This is not okay. This is where I realize that something needs to change. But what?
Here’s the part where you now get to sort your bank account history by individual sections so you can see how much you spent in each of the categories you outlined previously. This will help you see where your spending has gone to. Here’s a break down of my expenditures:
|Auto & Transport: $457.25
Car payment: $219
Car insurance: $111.55
New tail light: $5.84
|Food & Dining: $1,158.78
Fast Food: $241.68
Coffee Shops: $128.37
Alcohol & Bars: $60.89
|Business/Blog Services: $294.28
Shop Supplies: $209.15
Blog Upkeep: $85.13
Educational Expenses: $9.72
|Entertainment Purchases: $202.85
|Personal Care: $115.97
Hair & Beauty: $58.29
Gym: $57.68Travel: $122.63
Rental Car: $107.70
Home Furnishings: $655.37
Pet Food & Supplies: $174.25
Blog Swaps: $58.60
Here’s the part where you look at your break down of charges and decide where your trouble spots are. Once you’ve identified those parts of your life that are costing you too much money you can make a plan going forward for how to fix it. Pick out the things you are willing to give up or do more frugally, and make some goals going forward.
No more fast food. Instead there will be meal planning, shopping lists, and preparing ahead.
Coffee shops = no. I need to make coffee at home, it’s just lazy lack of planning on my part.
Shopping = no. No more frivolous spending. No more retail therapy, just real therapy.
Entertainment budget-No more buying books (except for swaps) until I’ve read 80% of what I have already.
Funnel all the extra funds into my savings account.
Try and sell the products in my shop.