GGGL: Follow the money

Controlling your spending is easier than you think. In fact, by this time next month, you can be well on your way to a disciplined money management system. The beauty of this system is that it is simple to fit it to your financial circumstances and needs. Stop being broke. Stop wondering where the money went at the end of the day. Or the week. Save without suffering. Worry less, relax more. Sounds nice, doesn't it? And it can be your reality.

For years, I have struggled with money. During my first marriage, I was in charge of the checkbook, then as a single mother, I was in charge of everything. While I did okay most of the time, I had little discipline, and by the time payday rolled around, I was counting change to buy gas or milk. Finally, I remarried and my husband took over the money management. I thought that was the end of my problems. Right. Instead, I was just blowing through my personal spending money instead. And fast. I would get this money on Friday and be broke come Sunday. Not exactly the way to build wealth. Like you might expect, I got fed up with myself and with being broke. Then I figured out a simple way to take myself in hand and change bad habits. This simple system is comprised of three steps. You will need to do these steps in order. Make sure this is what you want, because as simple as the system is, it still requires some effort on your part.

First, you will need to spend at least a week, up to a month, tracking your spending. I can see you cringing as I type this. However, it's not the ordeal you think it might be. Go to a department store and pick up one of those spiral bound memo pads. These fit in purses and pockets with ease. Add to that an ink pen (no erasing to make yourself look good). Carry these with you everywhere and track that quarter you put into the candy machine at the grocery store or that hundred dollars you spent on a massage. Simply put the date at the top of the page, and each time you spend money, write down the amount and what it was for. Your descriptions can be vague, like groceries, or specific, like eggs, milk and peanut butter.

If carrying this notebook seems too much, you can just make sure you get receipts for everything. And I do mean Everything. So no vending machines. Keep the day's receipts together and highlight the date and total on each. However you do this is up to you. Just be honest. If you fudge the numbers, you hurt yourself. I won't suffer for it. You will be the one still stuck at the end of the week with ten cents in your pocket and no idea where all your money went. Think you can handle step one? Good.

Step two should take you about an hour. Take your little notebook or stack of receipts and take a good hard look at where your money went this past week. Write down the first thing you spent money on during the week, then leaf through your records and see if you spent on that same thing at another point in the week. Total this up for step three. Work your way through each page or receipt. It's amazing how much those daily candy bars eat out of your pocket (not to mention what they do to your waist line). At one point, I was buying a Hershey chocolate bar every day after lunch at work. They cost sixty-five cents a piece. That's over three dollars a week. For something that I only enjoyed for a moment and that was bad for me, to boot. When I looked at my little notebook and saw what that indulgence was costing me, I had to make some choices.

That's where step three comes in. Step three is simply determining where you want your money to go. For my personal spending money, I labeled a series of envelopes with these categories and how much was to go in each category each week. I do this in two week increments, as that's how we get paid. For instance, I have a savings envelope that gets twenty dollars every other week. That envelope goes in its special hiding place as soon as I've got the money in it. I don't carry it with me, because that makes it tempting to spend it, thinking I'll make it up later. But then I don't. So better to leave it hidden at home. So, determine your categories. Do you have a weekly activity that requires you to buy a meal out? I meet with a fellow writer, so I have budgeted food money for that night. Our meals out are never pricey, but it's nice not to worry if I'll have the money to eat.

So, how are your categories looking? Do you have too many? Depending on your spending budget, I would limit myself to five categories. Feel free to include a miscellaneous for those impulse purchases. But this should by no means be the one that gets the most money. That one should be largest is the one you most enjoy. For me, that's books. A full quarter of my spending money goes there.

I've based this plan mostly on personal spending, but it can be extended to your entire household budget. Use this system to change the words "I can't afford it" to "how can I afford it".

That's all there is to it. A week of noting your spending habits can go a long way toward helping you break the bad ones. Follow that with a little honest analysis, some well thought out budgeting, and you set yourself up for success. Try this for a few weeks, see how it goes. Are you running out of money in certain categories and not others? Make sure the categories you have set up are the ones closest to your heart. Don't create a category unless it's reflects how you really want or need to spend your money. Keep fine tuning your budget until it works for the way you live. And never go broke again.