Like the ocean tide;
money rolls in and money rolls out.
How can one create a sound budget and a solid foundation without knowing exactly what is spent every month? The rent / mortgage, car payment and cell phone bill are usually about the same every month. Those are not the issue. It is the little stuff that adds up: parking meters, quick stops at the drug store and the favorite coffee drink. These “quick wants” add up and by month’s end there is less money for bills, vacations and savings account.
A great way to figure out what expenses are is to create a 30-day spending diary. http://www.crown.org/pamphlets/pdfs/30-DayDiary.pdf . Start at any time during the month on the coinciding date and enter every single penny that is spent.
Be diligent and honest to this stage of the process as it is one of the most important steps in achieving financial freedom. The budget does not lie and the numbers will give a true sense of where money is spent.
Just for kicks, plug in one small, daily expense. It can be anything from the favorite coffee drink to the pack of cigarettes or soda. Use http://financialmentor.com/calculator/latte-factor-calculator to see the annual cost of any expenditure.
At the end of the 30 days, take a deep breath, add up the totals and see the financial reality. Look at the numbers, chew on them and start thinking about what needs to change. Remember, this is not the end of the fun. It is a great way to start building a positive financial future.
photo by khunaspix/freedigitalphotos.net
