Do You Need a Positive Financial Change in Your Life?

I’m thinking it’s time that I make a few changes when it comes to my household budget. What needs to change and how to go about doing it are the questions circling in my head. Where do I start? What do I change? Have you asked yourself these same questions?

We are all familiar with the financial basics: stick to a budget, put money in savings, bring your lunch to work, etc. We try to manage our finances and, all too often, still fall short at the end of the month. It turns out we can’t put as much into savings as we hoped or we don’t have the money available in our budget for the birthday present we anticipated buying. I discovered this is exactly why I need to make some financial changes. After a little brainstorming and research, I have come to the realization that what I need to do is keep better track of my spending.

When budgeting, I believe most of us recognize the need to record our available income after taxes, and include the bills we pay the same amount on every month: rent/mortgage, utility bills, loan payments, etc. These are fixed expenses that do not change from month to month. In my opinion, what can wreak havoc in anyone’s budget are the variable expenses. Variable expenses have thrown my budget off over and over again.

Variable expenses are expenses that change from month to month: food, gas, car maintenance, entertainment, holidays, etc. For example, I tried to budget $150 on food this week (think family of four with a son who doesn’t stop eating). Well, my daughter’s classroom asked families to bring in fixings to make nachos and it was my turn to provide appetizers for our monthly book club group. I ended up spending $190, which is $40 over budget (yikes). Many of us (like me) tend to estimate these variable expenses and going over by $40 completely sabotaged my plan for my mother’s birthday.

What should I/we do to prevent this from happening every month? I discovered that estimating what I will spend gives me a false sense of financial security. If we want to be sure of the budget we draft, we must commit to tracking both fixed expenses and variable expenses. By tracking I mean keeping an itemized account of every dollar spent. To get an accurate spending pattern, it’s suggested that individuals track for at least four to eight weeks and save every receipt. This will provide a realistic financial pattern in order to build a successful budget. It takes time and commitment to track expenses but I think the impact of feeling in control and secure in our spending is well worth the effort. I’ve started saving all of my receipts and now it’s your turn. Check out the following website to get started.

http://www.tv411.org/sites/default/files/Finance01_Create-a-Budget.pdf

 

 

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