Hard times aren’t necessarily the problem for many families who are just squeaking by.
According to a recent survey, which focused on families who pulled in more than $75,000 annually, 44 percent of those living paycheck-to-paycheck blamed their money woes on lifestyle purchases such as dining and entertainment. That percentage jumps to 71 percent for the under-30 crowd.
A third of those polled admitted that a lack of financial discipline kept them from achieving their goals. Also, among those who blamed their money problems on dining and entertainment, more than two-thirds cited dining out as the root cause of their programs!!!
The fact that middle-class Americans are literally eating away their incomes shouldn’t come as much of a surprise. But no matter how much you make, the root cause of living paycheck to paycheck is always the same. When you spend your money on stuff you can’t even remember buying, all you have left is confusion and regret. It’s certainly a cycle, but for those who want to make a change, there is a way out. It’s called “tracking your spending”. Here’s how it works.
Tracking Your Spending
To see where your money has been going, pull out the last several bank and credit card statements, cash withdrawals and receipts. Create categories (groceries, dining out, entertainment, alcohol, sporting events) and go through your statements, line by line, tallying them in each category.
Once your total spending is tallied, you might be shocked, but don’t stop there. Continue tracking by keeping receipts and writing down all of your purchases. You can try using only your debit or credit card for discretionary spending, and then easily track your purchases through the bank’s website.
At the beginning of each month, keep a running total of your spending on every category, checking in occasionally to see how quickly the numbers add up.
Once you determine the truth about where your money is really going, you can continue with self-destructive spending habits, but you’ll never be the same — obliviously unaware of the consequences, because once you’ve seen the numbers, you can no longer ignore the facts.
If you want to change your spending habits once and for all, use the information you’ve gathered to create a new budget that aligns with your savings goals. You might start with a bare bones budget or a zero-sum budget where every dollar is accounted for. Just remember: tracking your spending is just one piece of the puzzle. What you do next is what matters most. The world we live in isn’t going to change; you have to change.
And if you want to keep more of the money you earn, the time to start tracking your spending is now. But brace yourself — you might not like what you see.
From a post on The Simple Dollar, www.thesimpledollar.com.