I’ve Been a Bad, Bad Girl

And how do I know this? Because I write everything down.

All my expenses, that is.

So I know that January was an especially heavy month for expenses.

This is good to know.  It let’s me know if I’m keeping in my budget, and if not, where I need to make adjustments in the following month(s) (I need to make lots of adjustments in February!).

This is how I do it: I transfer all the info from my checkbook register into a master list of expenses at the end of every month (or the first day of the following month).  I have a list for every month. Than I add everything up.  I subtract these expenses from my income from that month.

Just about every penny flows through the checking account, so I know my checkbook register is an accurate reflection what was spent and what came in for the month.  The end of month tally sheet allows me to have a snapshot of what is spent in any given category (i.e. Groceries, Eating Out, Insurance, etc), plus total expenses.

Ideally, Expenses and Income should be pretty close to the same number.  This is because I allocate Savings as an Expense.

I have been doing this for years, so I already know that January will be an expensive month.  January blows in and so do things like property taxes and insurance. For some reason, my pantry is always really bare in January , so I spend more than usual on groceries.  So, not much of a surprise, and not a financial meltdown either.  Doing this helps me keep on top of the cash flow of my household so that these things don’t sneak up on me and surprise me.

I’m not sure that it’s possible to get the clearest picture of your monthly and annual cash flow without doing something like this.  It’s a good start to keep an accurate checkbook, but the extra step of putting monthly expenses into defined categories and adding everything up at the end of the month (within categories, and then a monthly grand total of all categories) is a real eye opener.

This is my BIGGEST AND BEST tool for reigning in expenses.  I may have a vague idea that I spent $200 on groceries in a month, but numbers don’t lie.  So I add up the cost of all those individual trips to the grocery store (they’re right there in my accurate checkbook register, sprinkled throughout the month), put that number in the Grocery category, and I will probably be surprised at the result.  Pleasantly, I hope.

The end of month accounting is a bit of chore.  But it is an absolutely essential chore in order to make sure that I know what’s happening with my money.  And the good news is: the less I spend, the less work I have to do at the end of the month, adding everything up.  Less work is always good for a lazy person like me, so that’s a good motivation to hold down expenses.  Laziness rules!

P.S. Keep your Expenses notebook out of the reach of your dogs.  They might eat it.  (sadness)