Tracking expenses are one of the fundamental steps anyone can take to help get a handle on where their money is going. It’s a step I alway recommend when asked for advice on how to get started getting financial organized.
Well, after last month’s net worth update it’s clear I need to follow a bit of my own advice. A comment by Fervent Finance struck a chord:
I like his bluntness and here is how I interpreted his comment. Hey, congratulation on all the celebrations, but dude your cash reserves suck.
I’m fully aware. It’s the main reason we ditched a large expense in traveling to the West Coast this summer and opted for a smaller local road trip. That’s, however, is just a single step in our process. I’m getting back to basics. With my Excel spreadsheet and personal capital account in tow, I’m digging into our expenses to figure out what the heck is going on.
We Got Lazy and Sloppy with our Money
What’s a guy to do when he needs to figure out where is money is going? Well, I referred to our budget. We keep a budget in Excel which covers our fixed expenses like mortgage, utilizes, cell phones, etc. and other buckets like food, gas, and eating out.
Those buckets have guidelines. Overall the budget is balanced with a surplus each month. That surplus goes into saving. Well, there hasn’t ben a surplus lately. In fact, we’ve been dipping into our cash saving pretty regularly.
Overspending is, not a nice trend to be developing with larger expenses like college for twins on the horizon. Here’s is our budget buckets for food, gas, and entertainment/eating out.
We have three children, and our eighteen-year-old twins pay for their own gas, and almost all of their entertainment these days. They are also eating with us less frequency too.
Looking at these three categories between April-June here are the average amounts we spent.
- Entertainment $361.00
- Food $1540.00
- Gas $360.00
- 80% increase in Entertainment spending.
- 92% increase in Food spending.
- 80% increase in Gas spending.
I think I found our problem. Now the buckets for food and entertainment capture many things, eating out, movies, household items, etc. But it’s clear we have a problem in this area which needs to address immediately.
There’s no real reason for any of these above average spending. We just let these categories get away from us. We have not been tracking them as closely, and it shows.
So what’s a family to do when they realized they overspent for the last several months? Stop overspending immediately and finds ways to reduce expenses.
Cutting expense is something that can be done today. We are in control of what we spend each day, tomorrow, next week, etc. Once identified or realized that you are heading down the wrong path in a particular area of spending or for us we found three, you can take instant action to address.
Entertainment and eating out is easy; we will just stop. We need to remind ourselves to pack lunches and give up the convenience we’ve been enjoying to save money.
The overall grocery bill will need to be further examined to understand why this bucket is so high, but immediately shopping with cash and setting a limit per week can drastically reduce the overspending here.
The gas bucket is an interesting one. We are driving less, gas prices have relatively been stable. We have newer cars and are using premium grade gas which I believe is the cause for the miscalculation of cost here.
If you find yourself in similar situation keep in mind, you are in control. It will take some discipline, and possibly more of your time to break these bad habits, but it’s the quickest way to have an impact on your money.
What ways have you found the best to cut expenses? Do you regularly track all costs and review? What have you done to combat overspending?