You know the feeling. You take out your wallet to pay for lunch, or a few items at the grocery story, and… it’s empty. Or nearly empty. You wonder if you lost money somewhere; maybe you dropped a $20 bill in the restaurant parking lot last night. Then, you do some quick mental math and realize that you really have spent it all.
If that’s ever happened to you, you’re not alone. Whether you’re using cash or a credit card, it’s easy for spending to get a little out of control. Fortunately, there are steps you can take to get a handle on your spending and always know how much is in your wallet.
Start with a Budget Planner
The best place to start is with a budget. No budget? No problem! Quizzle.com has a great budget planner that will help you categorize and structure your on-going, regular expenses. Once you know how much money you spend on bills and necessities like groceries, you’ll know how much is left over. It’s called “discretionary income.”
Figure out Your Discretionary Income
BusinessDictionary.com defines “discretionary income” as “What remains after expenses for basics (such as food, clothing, shelter, utilities) and prior commitments (such as school fees and loans) are deducted.” We define it as simply the money you have left after you pay your bills!
Discretionary spending is where most people get into trouble. You’re not likely to get an overdraft notice from your bank because you decided to pay a few hundred extra dollars toward your student loans. You might, however, be notified that you’ve over-extended yourself after buying an iPhone.
Document Your Spending
If you’ve never tracked your spending habits, consider keeping a written record of them. Buy a small notebook and document where and how you’ve spent your money. At the end of two weeks or a month, you’ll have a good idea what’s happening to your extra cash.
The key to controlling discretionary spending is to decide how you’re going to spend the money before you have it. Decide ahead of time how much money you’re going to spend at restaurants, movie theatres, hobby shops and your favorite gadget stores. Set a limit and stick to it.
Be Realistic
Use your “spending notebook” to build your discretionary budget around your existing spending habits. In other words, if you spend twice as much on coffee as you do on books, don’t set aside more money for books than for coffee. Not even if you think you should spend more money on books. The fact is, you don’t, and that’s ok.
Learn What Triggers Spending
Also, start paying attention to why you spend money. What triggers your shopping spree? What motivates you to eat out when you have a refrigerator full of food at home? For example, some people are emotional shoppers. Buying things makes them feel better after they’ve had a bad day. Others like to celebrate by spending money – buying a fancy dinner, or a new outfit, for example. Still others feel a genuine need to “keep up with the Joneses.”
Knowing what triggers your spending will help you control your spending. And it may motivate you to find better (and less expensive) coping mechanisms.
Lastly, a quick, but important, side note: Savings – both for emergencies and for retirement – should be counted as part of your regular budget, not your discretionary income.
For more ideas on how to improve your financial health, check out Quizzle.com, where you’ll learn how to achieve your credit potential and get home loan recommendations tailored to your unique situation.
And check out these other great money-saving articles:
- 11 Budget Planning Mistakes to Avoid
- Prepare for Christmas… Now
- 6 Tips for Budget-Friendly Shopping at Yard Sales
- Cut Cable TV and Slash Your Monthly Expenses
- 12 Ways to Spring-Clean Your Finances
