Remember how I said I wasn't going to participate in the No Spending 12x30 monthly challenge for this month? Well at first I wasn't... I spent a ton of money at the first of the month-I bought things for my apartment, I bought supplies to open my new shop, and I fully admitted I wasn't going to be stopping my spending. But then I was surprisingly thrust into a new budget.
I'm going to buy a house. I mean, I just decided I was ready to move and if I was going to be spending so much I might as well buy something. So I applied for a mortgage, I was approved, and I'm already house hunting. It all happened in a matter of hours, and the one thing that has been stressed above all is "save save save!" So now? Now I'm on a no-spend budget.
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:
| Utilities: $1,659.98 Rent: $1,402.7 Electricity: $45.27 Internet: $78.95 Television: $33.06 Phone: $100 |
Auto & Transport: $457.25 Car payment: $219 Car insurance: $111.55 Gas: $120.86 New tail light: $5.84 |
Food & Dining: $1,158.78 Groceries: $650.35 Restaurants: $77.18 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 Music: $54.18 Movies: $25.00 Books: $88.67 Games: $35.00 |
Personal Care: $115.97 Hair & Beauty: $58.29 Gym: $57.68 Travel: $122.63 Rental Car: $107.70 Other: $14.93 |
Shopping: $1,374.72
Home Furnishings: $655.37
Clothing: $211.75
Online/Subscriptions: $128.60
Pet Food & Supplies: $174.25
Other/Hobbies: $146.15
Blog Swaps: $58.60
Yikes. I mean really yikes. When you break it down like that it's pretty easy to see where I'm going wrong. I'm sure if you've broken yours down you're looking at it in the same kind of horror that I am. Well, maybe you're not, but I certainly hope I'm not the only one who lets my spending get out of control. Not that I would wish that on anyone, but man it's nice to not think you're alone in your bad choices.
So what can I do about this? Well I can't really get any of the money I spent back, but I can take a look at my bad financial choices and learn from them going forward. A penny saved is a penny earned right? I'd rather funnel some of those wasted dollars into my savings account-which I need to be doing if I'm buying a house.
So let's look at where my biggest offenses are. I mean I can't get around paying rent obviously, nor can I get around any of the auto expenses since I have to drive myself to work. Honestly, my mistakes are in laziness and trying to shop my feelings away. My food budget, specifically the hundreds of dollars I spend on fast food, is WAY too high. I mean I know that the groceries bill isn't entirely groceries either, it's lazy shopping. I'm also spending way too much in shopping, entertainment, and other categories...
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.
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.
So what am I going to do about it? Well here are my new financial goals:
- 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.
How do your finances look? What are you doing about it?
