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January 12, 2011

A Simple And Effective Way to Budget and Save Money

In today’s fast paced world it is very easy to over spend. If you have a hectic schedule, which most people do, it’s very easy to go over your budget. With the threat of a possible recession, which has hit my neck of the woods full fledged, it is important to track expenses and save whenever you can. There are plenty of very simple ways to cut cost and prepare for whatever financial upheaval may be coming.

Around June of last year I told myself that I was going to save more and find out why I was always chomping at the bit around pay day. Yes, I have seen a decrease in income but not so much that I should be barely scraping by. So I decided that I would set up a budget. So I pulled up a spreadsheet in Excel and designated the amount that I was going to spend for gas, groceries, cat food and anything else I might need. I was very proud of my efforts and thought, “Hey, I’m on my way to financial security!” A few weeks later I found myself asking the age old question, “Hey! Where did all of my money go?” I pulled up the budget on my laptop and stared at it, disappointed that it had not helped at all. Then I thought about it, I glanced at the budget now and then but I had been lazy about actually plugging number in and keep track of what I spent. I thought that by keeping the figures in my head, I would regulate my spending.

Eventually I faced the fact that the only way I could really budget money was to find out exactly where it was going. At first it seemed troublesome to think that I was going to have to plug in numbers every time I spent something and save receipts until I logged the information. Then I realized that I could take a few minutes out of the time I was on the computer to type in what I had spent for the day. Deciding to do this made me realize two things. First of all, there was no reason to spend money everyday. By organizing my days and writing down what I needed to buy on a weekly basis I would only have to plug figures into my budget on certain days. Secondly, if I did not use my debit card or credit cards, it was easier to keep up with what I was spending. I know exactly how much cash I have at all time but I only have a rough estimate of how much money I have on my debit and credit cards. Plastic makes most of us feel like we have more money but that is money we probably should not be spending.

Not rocket science, you say? What a simple idea, you think? Well, yes, it is very, very simple. Keeping track of every penny that you spend and what you spent it on is essential to budgeting. Give it a try for two weeks and see what a difference it can make.

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