Managing Your Spending- One Basic Tool

Have you ever gone on a shopping spree with some good cash, only to return and was sure you lost some money in transit? Actually, you did not lose a dime. You only went shopping (..smiling). Again, have you ever had a pay raise and after all, you did not feel any cushioning from the pay raise? Maybe you need to keep a check on your spending habit. Budgeting is the simple tool to keep you in check and make you spend wisely. I once had a twenty percent pay raise. I realized that I still spent everything without any difference in my living standard. The question is, “what happened to the 20%?” I then started making my budgets, writing them down, and keeping record of actual spending afterwards. Things began to balance up naturally. This taught me that one can spend all one has no matter how much one has and it would still not be enough. On the other hand, one can save out of what one has no matter how little one has.

Budgeting in simple term means planning ones income and expenditure. Making a budget gives one an idea of what one's cash flow looks like. It helps one develop discipline when one learn to respect its boundaries. Maybe you have always lived in debt; this is your first step to becoming debt free. You do not necessary need a consultant or special software to help you out with this. To make your budget, here are things you need to consider:

 Make a list.  First, consider making a list. You need to plan your budget by considering how much you earn and how much you should spend. Make a list of your regular expenses including rent, transportation, feeding, and the rest. Compare these regular expenses with your regular income. This is the first step. When this is done, check if you have a negative or positive balance. If you have a negative balance, that means you need to cut down on your spending. Review your list by reducing or cutting out the not so vital expenditures.

Plan the access to your money. Do not keep your credit or debit card very handy. Always plan it before you access your money. Do not just make random and sporadic withdrawals. Limit the access you have to your money. If you do, you will be more rational and in turn reduce unnecessary expenditures.

Write it down. Writing down your expenditures has a natural way of helping you build a healthy spending culture. When you already have an idea of your financial status, you may need to write down every single expense you make. This will help you keep track of what you spend money on with reference to your budget. It will also help you to be careful on the things you buy. Let me say that it’s just a simple way of being accountable to yourself.

Make room for investments. In addition to the already mentioned, you need to make room for investments. In your budget, do not plan to spend every dime you make. Ensure you always put away some money for savings or investments. This could pay off pretty well when you retire.

Lastly, do not make unnecessary expenses. This cannot be over emphasized. Understand the difference between luxury and necessity. Meet your necessities and always avoid luxury. Making unnecessary expenses would always keep you in a struggle to maintain a financial balance.

At this point, it is good to note that even in money matters, waste management is very crucial. Learning to manage your finances better leaves you happier and free from debt. Spend wisely today and live happy tomorrow… See you at the top.