You say you know where your money goes and you don’t need it all written down to keep up with it. If that’s the case, I want to set you a challenge; keep track of every penny you spend for one month. Yes, I mean every last penny. I think that you will be shocked by what the tiny expenses add up to.
Take the total you spent on just one unnecessary item for the month, multiply it by twelve (for the months in the year) and multiply the result by 5 to represent 5 years. That is how much you could have saved and drawn interest on in just five years. That, my friend, is the very reason all of us need a budget.
Controlling the little things
If we can get control of the small expenses that really don’t matter to the overall scheme of our lives, we can enjoy financial success.
The little things really do count. Cutting what you spend on lunch from £5 each day, to £3 each day will make a difference. In a five-day work week you could save £10 a week, £40 a month, £480 a year, or £2,400 in five years. Plus interest.
Do you see what I mean? It really is the little things and you can still eat lunch everyday and that was only one place to save money in your daily living without doing without something that you really need. There are a lot of places to cut expenses if you look for them. So you should start a budget today, because it will benefit you.
Don’t forget reoccurring events
Some things happen at the same time every year. That includes Christmas and birthdays, so make sure you make previsions for them within your budget. Also, remember to set aside extra if somebody you care about has an 18th birthday, or a 21st birthday coming up.
Set some specific long term and short-term goals. There are no wrong answers here. If it’s important to you, then it’s important period.
Perhaps you want to be able to make a down payment on a house. Or maybe you want start a university fund for your kids, buy a sports car, take a holiday to Cuba. Whatever your goal is, it could be the thing that prompts you to get a handle on your financial situation now.
Image by Starling Bank and Lensi Photography.