If you are finding it difficult to save money or live within your means, it may be that you are not aware of your spending habits. However, taking control of your finances can help you to save for a rainy day, vacation or new car. By documenting your purchases in a paper or electronic journal, you will be able to clearly see your financial habits. This can help you to cut unnecessary spending and gain a bit of financial freedom.
Decide whether you will use a paper or electronic method for your journal. Pick a method that will allow you to easily record your spending and purchases throughout the day. If you go with paper, you may consider using a spiral bound notebook for easier organization. You might want to consider a smaller-sized notebook so that you can fit it into your purse, briefcase or backpack, which will make it easier to record your purchases as you make them. Electronic versions are usually best organized on a spreadsheet.
Organize your journal by the month. Budgets are often planned on a weekly or monthly basis, giving you a specific amount of money that can be spent within that time. Keeping a journal by the month will help you to compare your habits from month to month, which can help you to adjust your spending habits where needed.
Document your monthly income. Subtract all taxes and withholdings, such as state and federal tax and your 401(k) plan. The money that's left is what you have to work with for the entire month.
Draw a line vertically down the page, using a ruler and pencil. Write 'Fixed Expenses' on the left side and 'Non-fixed Expenses' on the left side. If you using an electronic spreadsheet, use two columns that are side-by-side; type the column names accordingly in the first lines.
List all of your fixed expenses in the appropriate column. Fixed expenses are things such as rent, cable, telephone and health insurance. They usually cost about the same amount each month. Write or type the expense name and its cost on the list. Write the total amount for the month at the bottom of the column.
Record all of your non-fixed expenses throughout the month in the appropriate column. These expenses would include all other purchases, including groceries, entertainment, clothing, coffee drinks and anything else that you spend your money on throughout your day.
Separate your non-fixed expenses by specific categories if you want a more detailed record. For example, make a page or column for all food-related expenses, another for clothing and personal grooming, and one for household purchases. This can help you to more clearly see if you are overspending in any particular area.
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