a quick and easy way to control spending
I am not a budgeter. I have never thought in terms of categories of spending, partially because I view all of my expenses in a single bucket: something to be minimized where possible and reasonable, regardless of what it is. Because of this I sometimes ignore overspending for small purchases and focus on overspending for big purchases.
What does that mean? I’ll concentrate on avoiding spending too much on buying a new dishwasher, but I’ll drop $10 per day on lunch at work. Both may be equally significant in terms of saving, but as you know from reading this blog I am much more focused on making more than I am on spending less. But I try not to waste money.
I was spending about $10 per day at lunch. My client is in a less-than-pleasant area of New York, and the main dining option is the overpriced and not-terribly-satisfying cafeteria. I found myself spending $8-$9 for a wilted, tasteless salad and decided I had to do something about it. So what did I do? Set up budgets? Cut up my credit card?
No, I just started writing down how much I spent every day in a list (I keep it in a spreadsheet or jot notes in my Moleskine). I figure out each week what my average per day was, and here is the funny thing: seeing it written down creeped me out. Somehow just writing it out made me uncomfortable. I started thinking about writing that number down each day and found that this one tiny little habit change made me go from spending $10 per day to about $2 per day now (once or twice a week I won’t bring lunch for various reasons).
Writing anything down in a diary is a good way to eliminate a habit.
1. Spend too much? Keep a notebook and write down every single last purchase – a pack of gum, a book, an online purchase, even your cable bill. That running list of money leaving your life will make you think twice before whipping out the wallet.
2. Eat too much? Keep a food diary. Write down every single last thing you eat. Everything. You’ll start to feel the pain if you look back on what you actually ate in a single day, rather than what you tell yourself you ate.
3. Complain too much? Every time something bad happens that makes you unhappy, write it down. Look back at the list at the end of the day and see if you still care about it. That guy who cut you off during your morning commute probably wasn’t worth the agitation when you reflect on it at the end of your day.
4. Waste too much time? Keep a diary of your appointments – online calendars or pocket calendars work well for this. Maybe you have an appointment from 2 to 3 at the dentist, then 5 to 6 you have to pick up the kids and make dinner. You know those have to be written down – but also write down what you did from 3 to 5. If you can’t remember what it was, or you find that four times a week you’re writing “had to run to the store because we were out of ….” you may see that your time could be better spent.
5. Any other bad habits? If you smoke, watch too much TV, play too much Wii, don’t exercise enough, root for Boston-based sports teams or even find yourself reading blogs too often you can write down your habits and understand what’s going on.
I know this seems like a simple tip but the longer I study self-improvement the more I find that extreme simplification is the easiest and best way to achive your goals.
photo credit: desi.italy
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Self management in any way is essential for personal and professional success. The problem is that few people choose to asses what they are doing. They like doing the “easy” thing and keep on spending more than they can affotd to. And what’s even worse, they don’t even think about ways to make more money. I was talking to some friends of mine about opening a certain online account that would give them a $25 bonus if they put $1 ( Etrade). And they looked at me as if I was going to scam them ( or if I was talking out of my….)
I have never budgeted, either. Over the years I’ve casually established a standard of living that is less than my income (and yes, Steve, and I have increased my income by establishing a part time consultancy as an LLC). I’m satisfied with how I live, and have a lot of money left over for savings/investment purposes. I don’t think it’s a matter of control, but rather understanding how you want to live your life.
Thanks Steve – You’ll have more to budget for now
I tried writing down ALL of my expenses (every penny that I spent) for just one month. It was eye opening when I did it, but never found the need to do it again.
Like you, I focus on the income FIRST and the expenses SECOND – income is unlimited; expenses <= 100% of what you earn. The equation is too compelling to ignore.
I have started keeping my expenses on a spreadsheet; it is just so handy for budgeting. Starting next week I am going to bring my lunch to work. I will be saving more on lunch a week than I spend on travel – crazy!
That’s what I do (writing it down). Knowing I will be doing that makes me more conscious of what I’m spending.
Break everything down to the basics, so you can see exactly where your money goes. Many people have problems with finding out where all their money goes and they don’t realize just how much money they do spend buy needless things or paying extra for stuff they don’t need.
So it helps a lot with having your expenditures right in front of you in some legible form.
I have also recently started tracking down my expenditures vs. my income since the beginning of this year. You learn a lot by doing so.
i started out tracking my spending in a small notebook – which i did for about a year – and it forever changed my relationship with money and spending. the simple act of having to go through the trouble of writing it down and knowing that i would need to deal with it later was often enough to squash the urge to spend the money.
as for my other bad habit, i’m not sure that i can quantify and document my love / heartache of my beloved sox. as my husband says — it’s not a disease, it’s a privilege!! i’m not sure that they make a diary for that!
@Punk cents: Being a SOX fan is one of the most important bad habits to break. Join Yankee Nation. Resistance is futile.