You have a well-paying job, but month after month you find that you just don't have enough money to make the car payments, fill up the gas tank or pay the rent. Makes you wonder where all your money disappeared to, doesn't it?
disappearing act
Keeping track of your expenses is a good way to know where your money goes. Let's look at an average day's expenses for a young professional bachelor:
Expense No.1:
You shower (with hot water), brush your teeth, wash your face, apply deodorant, and spray a dash of cologne: total cost = $2.45.
Expense No. 2:
Take a taxi to work (traffic jam for ten miles):
total cost = $12.50, or
Drive to work ($.60 per mile for ten miles):
total cost = $6.00 (doesn't include parking), or
Use public transportation:
total cost = $3.00
Expense No. 3:
Buy the morning newspaper, coffee (or orange juice) and a bagel (muffin or toast): total cost = $6.75
Expense No. 4:
Step outside to smoke your daily pack of cigarettes: total cost = $2.50.
Expense No. 5:
Buy lunch at the local cafeteria or McDonald's: total cost = $8.00
Expense No. 6:
Answer your cellular phone and speak for five minutes (add an extra ten if it's your girlfriend): total cost = $3.75
Expense No. 7:
Send that "Happy Birthday" card you forgot to send grandma back in Italy (express delivery): total cost = $6.50
Expense No. 8:
Buy your favorite afternoon snack: total cost = $3.75
Expense No. 9:
Have a drink with your buddies after work: total cost = $30 (you bought a round).
We all know the expenses don't end there. Read on for more expenses and what you can do to never be broke again.
Expense No. 10:
Take taxi home (ten miles):
total cost = $12.50, or
Drive back home ($0.60 per mile for ten miles):
total cost = $6.00, or
Use public transportation:
total cost = $3.00
Expense No. 11:
Cook a nice dinner for you and your woman: total cost = $12.00 (does not include the bottle of wine). Add an extra $40 if you go out to a restaurant.
Expense No. 12:
Surprise her with flowers and a little gift: total cost = $10.00.
Expense No. 13:
You use three condoms: total cost = $4.50
Expense No. 14:
Return DVD to the local Blockbuster (three days late): late fees = $6.00.
Expense No. 15:
Watch TV for two hours (you have cable): daily cost = $2.00.
Expense No. 16:
Surf the net for two hours daily cost = $1.33 (you use AOL).
Expense No. 17:
Play your favorite music album, brush your teeth and laugh yourself to sleep (includes daily rent): total cost $27.00.
Surprised? Your total daily cost is $134. That's $670 a week. Are you still wondering where all your money went? And I still didn't go over the car payments or the weekend entertainment expenses.
Besides these recurring expenses, there will be others that must be paid on a semi-annual or seasonal basis such as taxes, insurance premiums, car registrations, as well as gifts and holiday expenses.
The last thing you need is an unexpected tax and insurance bill on the same month as your girlfriend's birthday while your bank account has a balance of $25. To avoid such a headache, you need to track your spending and plan for unexpected debts.
track your expenses
The only way to keep spending under control is to track your expenses. This will put you in a better position to evaluate your spending habits so that you can make the proper changes and plan ahead to improve your monetary position.
Tracking expenses usually requires time and commitment. Fixed expenses are the easiest to track because they remain constant each month. However, flexible expenses are a little more difficult to monitor.
One way to keep track is to use an account book, a Palm Pilot, or computer program to record where you spend your money. You can start out by saving receipts, check stubs and credit card receipts to document expenditures, sorting them by expense categories, entering them into your system, and finally tallying them up.
make adjustments
Once you have an idea of just how much you're spending on a monthly basis, you can compare it with your income and make any required changes to your spending habits in order to balance your budget.
From time to time, you may need to make adjustments in your spending plan. The important point is to make sure that you stay within your income.
plan for retirement
You should be including savings as a regular expense. I recommend that you save 12% of each paycheck. In fact, try to keep savings a priority and don't relegate it to what might be left over.
By keeping a careful eye on where your money goes and how much you are spending, you are more likely to have a positive cash flow and even some leftover for retirement.
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