Hi Everybody!!

It’s another great week here at Ideas By Dalba.  I continue with the theme of the month “Money Solutions”.  If you didn’t catch my first post in the series “Get Out of Debt for Good” you can see it HERE. This week’s post is about knowing how much ‘discretionary’ income you are really spending. Its so important to know exactly where your money is going.  Ever wonder where your entire paycheck went? Why is it two days after payday and you do not have a dime? You get paid well but yet you are always broke?

The first step is to obviously figure out your monthly expenses. Some people keep an expense journal. Any notepad or notebook would do.  Write down all your reaccuring expenses and your monthly net income (after taxes).  Tally your expenses and subtract from your income.  The result is your discretionary income.  If you have a negative balance or a very low balance look at your expenses and see what you can either pay down (credit cards or loans) or eliminate.  If you find yourself in this situation you have to read my post from last week “Get out of DEBT for GOOD“!

Ok now that you know your discretionary income – the money that you can play with, it’s time to track where you are spending that money. For one week track every expense you make. I’m not talking about purchases you make with credit cards, I’m talking about items you purchase either with cash or debit cards. Write down your purchases in your expense journal and at the end of the week look back and see where your money went. Did you buy something you didn’t need? Did you buy lunch three times this week? How about the yummy cup of coffee you get every morning? This is where you will see what is happening to your money and how you can save to take that vacation you have been wanting, or to buy that new item that you have been eyeing.

Another great way of keeping track is an expense tracking app.  There are many free options for Android and iPhone users. Apps make it even easier, some will have you just scan your purchase receipts and will add to your expense report for you.

Two ways to save more money:

  1. Are you the type of person that takes out $20 from the ATM, but only needs to spend $5, but because you took out $20 you end up spending the entire amount? If this is you, a good way to hold on to that extra $15 is to put it back into your account as soon as possible. The longer you wait to put the money back the higher the likelihood of you spending it.
  2. Are you the type of person that never carries cash around, always uses a debit card for expenses, and end up spending way more than planned because you know you have the money in your account? This type of person is detached from the real value of money because all they are doing is swiping a card. But when you hand over a few hundred dollars bills as opposed to just wiping it becomes real to you. If this is you then your solution is to take out a set amount for spending money. Try to carry small bills, tens, fives and ones to make your money stretch the most.

Stay tuned for the third post in this series and thanks for reading!

Dalba

**Disclaimer – Information provided herein are for informational purposes only and are not intended as a substitute for professional advice.

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