Your Spending Record, A Key to Controlling Your Money
A spending record puts you in control of your finances and makes it possible to see exactly how much money you have in any budgeted category.
There are different ways to do this. You can purchase an account book and write down each budgeted amount in a separate column. Then when you buy something from that category, write down the amount you spent and subtract it from the amount you set aside for the month.
If, for example, I have down $10 in my spending plan that I can use to buy gifts, and I spend $8.00 to buy a shirt for a baby gift, I will have to get my grandson a couple of little cars at $1 each for his birthday instead of something costing $7 or $10.
Another way to easily see how much you have for each budgeted category is to withdraw the money itself from the bank and put the cash in an envelope. This is especially effective when you buy food. When the money in the envelope is gone, you stop buying food for that month.
Many bills such as your house payment, gas or electric bill, phone bill and insurance payments can be set up to be paid automatically each month directly from your bank account. This is the easiest way to make sure essential bills are paid on time. Bills which fluctuate such as electricity which goes up in the summer when you turn on your air conditioner and down in the winter, can be pro-rated by the electric or gas company. That way you can pay a fixed amount each month and you don't have to juggle your budget to cover a high bill one month and a low bill the next.
Monitor your bank account regularly and be aware which bills have been paid and what your bank balance is.
When you set up your bank account, link your checking account to a savings or other account for overdraft protection. If, for example, your electric bill is larger than normal and it is automatically deducted from your checking account, you may overdraw your account. If you have overdraft protection, the extra money you need to cover those checks will come out of your savings account and you won't have to pay penalties, returned check fees, or other expensive overdraft fees. Just make sure that you keep enough money in the savings account to cover an accidental overdraft.
Don't be afraid to adjust your spending plan and modify it to meet your real-life needs. Especially when you first start keeping track of your money and spending from a written budget instead of just from what you think you have in your checking account, you will need to make corrections and adjustments.
Keeping an accurate spending record and being aware of where your money is going each month, will help you stay on track financially and keep you from sinking into debt.