Money Going Every Month

Written by: Finance

Where is Your Money Going Every Month?

Everyone knows they should have a budget, but many people abandon the idea, feeling they don’t work. Overspending in one area leads to borrowing from another, making it dead on arrival. If you’re looking to improve your personal finances, it starts with tracking where your money is going in the first place.

Create a Plan that Works

It helps to think of a budget as a draft that is frequently updated. Create a framework, and make changes as you determine what works and what doesn’t. Anything that keeps you paying close attention to where your money goes will improve your financial health. If your work to create a successful spending plan continues to fall short, you may need to look for areas to cut costs.

Every belt-tightening measure doesn’t have to be painful. If you are paying student loans, refinancing existing loans into one loan with a private lender can lower your monthly expenses. The process is simple, free, and takes only a few minutes. To fix the issues causing problems you need to recognize where you’re going off-track. There are several common issues many people face.

Pay Attention

Do you have a realistic idea of how much you need to spend to get through the month? Your vehicle needs gas and you need to eat. Is it possible you are underestimating how much you spend on routine expenses? You may not be overspending, instead, you don’t have a realistic idea of how much money is going out. Budgeting can help, but it may be beneficial to spend a month or two keeping a spending log instead. Spend as usual, but write down every dollar that goes out, and where it goes.

If you have children, school pictures, sports team sign-ups, and many other expenses pop up through the year. By setting money aside for these unexpected expenses, you don’t dip into grocery money when they pop up. The amount you plan for depends on the activities your children are involved in. Review previous years’ expenses to get a general idea of spending, and don’t be afraid to say no to expensive travel teams and other budget busters.

Be Flexible

When you are determined to pay off debt or build your savings, it is easy to be too aggressive with your budgeting. When there is no wiggle room in your budget, you will have to take the money from another category, which leads to shortfalls in other areas. Aim to have a small cushion in each category of your budget. Sit down and do the math. Determine the average you spend each month on utilities and other fixed expenses. It is unlikely that those numbers will change much from month to month, so plug them into your budget. However, you can consider options that can help you to save on utilities such as electricity such as energy comparison sites such as With such resources, you can compare providers’ rates in your area and switch to less expensive plans. For instance, if you live in Massachusetts and want to access Massachusetts electric rates, all you have to do is enter your ZIP code.

Now, look at your discretionary spending. This is where you have the opportunity to make some cuts, but it doesn’t happen by accident. When you see how much you are spending eating out, at the grocery store, or online shopping, you may be motivated to cut those expenses. Don’t try to cut these expenditures entirely, or you are setting yourself up for failure.

Don’t think of budgeting as an all or nothing situation. Continue to make adjustments until you find something that allows you to both spend and save. If you get off-track, work to get expenses under control, and look for what went wrong. Sometimes you may need to make substantial changes, but often paying close attention to your day to day spending will keep you on track.

Last modified: December 22, 2020