We're continuing in our Money Management Series. If you missed the previous entry, then you can find it here:Money Management: Part 1. Reminder: at the end of the month, The Lampo Group, inc. (Dave Ramey’s company) has kindly offered the book The Total Money Makeover and Deluxe Envelope System to be shared through a giveaway* here at Reviving Homemaking!
“Budget.” It’s a nasty little word that likely causes a feeling of suffocation. I’ve seen the budget-less philosophy on money time and time again. It’s called- “broke.” It’s the system that permits a person to pay what needs to be paid and then just not worry about spending. Before the next paycheck comes in, their activities come to a full halt as their bank account has dwindled too low to continue. These are also the individuals who in times of unexpected events or emergencies must panic because their accounts are too low and days to payday too high. This, my friends, is not just a very insecure way to live your life but also to orchestrate the life of your family. The wise counsel available (my favorites are Crown Financial and Dave Ramsey) all advise preparation as means of money management. In other words, be prepared for all life’s expenses by setting money aside. Furthermore, save!
You can’t do either of these, however, if you don’t know where you’re money is going. You will likely be surprise by the “extra” income you’ll find by simply tracking your spending down to the dollar. This is precisely where I recommend starting. If you’re coming up low or short before the next paycheck then you’re in need of finding where you’re money is going. Don’t be surprised in a little spend here and a little spent there adds up to a larger than expected amount. Initially, it’s sufficient to simply track the location and amounts of spending. Later, you can begin tracking item by item which will not only give you an idea as to how often you purchase an item (reveal bulk purchase opportunities) but also where the best value can be found. For more itemized tracking I recommend printing a price book sheet for each category and recording there. (For example, I have one price book sheet for household, one for personal, one for groceries etc). Below are several forms that are helpful in tracking and then will be helpful in creating your spending plan.
1) Spending Record - This is a good starting place. Simply record every transaction like you would in a checkbook register. If you'd like, you can categorize the entries on the right of the chart.
2) Price Tracking Sheet - Record location of purchase, price and item size on this sheet to determine if you're getting the best value (ie unit price). In addition, having this information recorded allows you to better estimate the required costs for the time period. In other words, no more total shock when a cashier give you your total.
*Note: I’m not an affiliate of any kind with The Lampo Group, Inc. or Thomas Nelson publishing. These materials were given to me by The Lampo Group,Inc. and it was agreed upon that they may be offered as a giveaway.
Up next we'll discuss Allocating Income and Scheduling Bills (with even more handy forms)
Please feel free to leave any tips you may have in the comment section below. This is simply how I've come to work with finances, but I'd be interested to know of other ways as well. :)
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