Find Out Where Your Spending Leaks Are, and Fix Them.
I got a pretty impressive email the other day, and I'm hoping it inspires you!It comes from a reader here at Budgetsaresexy (we'll call him Smart Budgeter), and he does a wonderful job at summing up a few points that we often don't hear about - or at least in this way. And what's even more interesting is that he uses & reloads GIFT CARDS to work it all out! Hah! Whatever work...Check it out:
J - I am budget crazy! Have been on a solid budget for about 2 years now. In the beginning, the hardest part was figuring out where the leaks in our spending was. For us it was grocery/and loose spending at the supercenter. Now we purchase/reload gift cards at the start of every paycheck cycle. We prepare a 2 week food menu and shop all at once. What ever balance is left on the gift cards is spent on non-need items like new towels, or treats (toys) for the kids. This tactic has made the biggest impact on our ability to stay disciplined to our budget and I suggest it to everyone I know. Take care - Smart BudgeterIf you haven't found them already, there are at least 3 great points to take from this:
Find out where your spending leaks are.
The only real way to do this is to track your spending for a month or two and see where it's all going (I know, it sucks, but you only have to do it once!) When you find it, you can then work on improving it and feeling good about it all. When I did this I learned that I was spending $300-$400 a month on clothes, electronics, $40 bottles of water, and all sorts of random stuff that I could care less about. That may be higher or lower than what you spend, but for me it was horrible and I wanted to change it.Do something about it!
Luckily, the only thing I had to do in order to quit shopping was to STOP going into stores ;) Since I don't shop much online, that pretty much cut out a good 50-75% of it (once I actively made an effort to not "shop for fun"). When I do shop now though, I'm always cognizant of the amounts I'm willing to spend in order to be happy with everything (roughly $100/mo) Sometimes I stick with it, and others I splurge - but at least it's a conscious decision I'm making now.Reward yourself and allow "extras" every now and then
For Smart Budgeter, it's all about treating his kids or picking up things he'd LIKE to have, but that he doesn't NEED. For me, it's a tiny allowance for lottery tickets, coffee, and an occasional new outfit (yes, I'm sorta like a girl in that way). As long as it makes YOU happy, it really doesn't matter what it is - just that you allow yourself to be human. Allowances like this keeps you motivated and sane, so be sure to include them :) Now get out there and start plugging those leaks!Labels: advice, budgets, money management, reader mail
posted by J. Money at
8:19 AM
13 Comments:
In my personal experience, budgets only retain their effectiveness if money is continuously monitored. Most personal finance sites state that monitoring spending is only required for a couple months until one sees where the money goes. My personal belief is that every receipt must be saved and logged. It's too easy otherwise to slip into old spending habits, not fully appreciating where the money goes.
I have a spreadsheet for this. I use Excel, but it can be maintained at no cost in Google Docs with a free Google account. This way I can track trends, such as spending more money on utilities in the Summer when air conditioning becomes a "quality of life" priority.
For some people, this is a mind numbing practice, but if you can force yourself into the habit, you'll see a more clear view of where the cash flow is on a macro level -- and better sense where savings can be found.
I agree!! i track my spending everyday its just a habit and it keeps me on my toes. I like looking back to see how far I've come.
I started saving my receipts. It is helpful.
I started using only pennies for regular purchases. I found that I spend a lot less when I have to lug around 25 lbs of change to buy a few groceries.
Just kidding, but can you imagine?
haha nice...I actually new a guy who tried to buy gas with $15 worth of pennies (he was waiting for a new c/c in the mail) and the cashier wouldn't accept it! he got so mad he just threw them all over the counter and walked out...without gas. pretty extreme, but pretty funny ;)
@Private - "budgets only retain their effectiveness if money is continuously monitored." I could see that...I'm not hardcore enough to track every last penny or log in all my receipts (although I applaud those who can, like you!), but I do understand how helpful it could be.
While I log into my accounts every morning and make sure things are well, I only actual "budget" - as in update all the numbers and review it - a cple times a month. I like the breathing room of averages and stuff. But then again, I've also been doing it for 2 years now and have gotten it down to an art ;) it helps when I don't spend much on things other than the monthly bills.
Man, I wish I could make a budget and stick to it but I like to enjoy life too much LOL. Even though my wife and I spend a ton of money we are fortunate to still spend less than we earn so I guess it's alright. Still trying to find that balance between saving for the future and living in the present.
I must admit I'm not a big fan of the gift card strategy for two reasons.
1. The retailers do not deserve the free positive cash flow.
2. It creates more plastic money therefore making my quest that much more difficult.
-Luke Sidewalker
All about finding a happy medium indeed :)
@Luke Sidewalker - That's true...I'm wondering if you could just do all this on ONE card - say like a prepaid Amex or Visa or something? That would work at all places and allow for leftovers & the same budgeting method.
I always thought leaking was a term used for women that are breast feeding and can't control their mammary glands (aka milk bladders) :)
Hey friend, thanks for the comment on the Problogger post. What you wrote here comes at a good time for me. Spending leak describes my habits perfectly. I'll be back often pestering you for advice.
take care
Josh
Yeah dawg, holler anytime. Perhaps a beer would help to stop the leaking for the time being ;)
That's an interesting tactic. I'm just wondering what kind of fees are associated with those prepay cards though. I've heard they can have some nasty fees associated with them.
I love the loading the gift card idea. This is great. I am going to try this technique. Thanks for sharing!
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