Every book, article or blog I have ever read about budgeting and getting control of your finances has said the same thing. The first step is to figure out what you have coming in and what you have going out. This makes perfect sense, except sometimes it is easier said then done.
The first part is easy. Most people know EXACTLY how much money they have coming IN. I know I do. Since I was laid off of my job I only have 2 regular sources of income and combined they only come to $1241.00 a month (just for the record, I am not on welfare and I do not receive any maintenance/alimony from my 19 yr marriage). I know I am blessed to have this much without a regular job and I am not complaining. Even though, I still wake up every morning in the midst of an anxiety attack, with my stomach tied into knots. I have a very large amount of debt from both my marriage and the last 3 1/2 yrs of ignorance, depression and my own poor choices. I also run my household on this amount, which consists of an 18 yr old son, 4 dogs, 3 cats, 3 reptiles and a very tiny mouse named Maryjane.
The second part is a lot tougher. If you normally pay for most everything with a debit/credit card it will be easier for you to track as you can just pull up your statements. I pay cash for almost everything, with the exception of a couple of bills I pay online with a debit Visa. This is a lot harder to keep track of, but none the less I did it. The recommended time frame is 30 days to get an accurate read on your spending habits, but if you can do it for several months (or backtrack your expenses for a couple of months) you will have an even better picture of your spending habits.
The results were a real eye opener for me and I bet yours will be for you as well. I was amazed at the things I did on a daily basis without even thinking about it that wasted small amounts of money. When I added them up it came to a large amount of money each month. Most were things I did in the name of saving time because I thought I was too busy to do the frugal alternative. A lot were food related or gas related.
Here are a few examples:
Stopping at the local Tigermart every morning for something to drink on my way out of town.($1.00 - 4.00)
Stopping at the fast food place within an hour of leaving home to get my son something to eat
because I didn't have time to cook/make something before we left. ($5.00-10.00)
Sometimes stopping at another fast food place 4/5 hours later after my son is done with classes (he goes to the local college a couple of towns away and commutes) because he is STARVING when he is done and I am tired and still have a 42 mile drive before we get home. ($5.00-10.00)
Driving either 25 or 42 miles into the larger towns on days we don't HAVE to for relatively unimportant errands or to visit friends. ($10.00 - 25.00)
Stopping at the grocery store to peruse the meat section for dinner since I have no idea what I feel like making for dinner. ($5.00 - 25.00)
Well, you get the idea. I was making terrible choices and had no clue. If you have not done the 30 day tracking of your expenses, I truly recommend sucking it up and doing it. It will give you some ammunition to use against yourself and the forces of evil (just kidding) that are driving you into financial ruin. It will also give you something factual to show your spouse and children when you start tightening your economic belt and they start to squeal. If you are out of money before the of the month, or just living paycheck to paycheck without any reserve it is time to make different choices.
I thought those choices would mean feeling deprived and living a "lesser" life but I was wrong. I am so new into this "frugal lifestyle" but I already can see that life is better, both financially and emotionally. I feel a lot more in control, my son feels better physically without all the fast food, my house is less chaotic and cleaner (that was a real surprise bonus) and for the first time in a long time I can see a little glimmer at the end of the tunnel.
I did the 30 day tracking the old fashioned way (an envelope for receipts, and a piece of paper then transferred info onto a notebook page) but here is a link to a website that has a free tool to help you track your budget.
If you are reading this it is probably because you are in the same place as I am, and need to do SOMETHING. This is the first step to SOMETHING.
Let me know what you come up with and if it is as big of a shock to you as my was to me.
Hope to hear from you, thanks, Tina