Finances: Input Vs. Output

Ok, time for another issue on controlling your finances. We've all been in a situation where you've lost track of your spending. You look up, and your bank account doesn't look as healthy as it once was. What do you do?

This is the time to figure out what is going wrong with your spending habits. We need to keep track of the money we take in and the money we spend. For most of us, the money we take in is the easy part because that doesn't change much. Since most bills seem to be issued in a monthly cycle, figure out how much money you receive in a 4 week or monthly period. For me, that would mean I would add two paychecks together because I get paid bi-weekly.

The next step is to determine where your money is going. Write out all your expenses that are required in a month, such as rent/mortgage, food, gas, etc. This will be your baseline, so you know how what you must pay matches up with your income. If your income does not cover these bills, then you really need to rethink how necessary the items you are buying are. For example, maybe your groceries are more expensive than necessary.

The final step is to figure out what else you spend in a month. These are things that are easiest to control, like going out to eat every day or buying clothes once a week. If this is your concern, be thankful because this is fixable. Writing down the money you spend in a month helps you to visually picture where the problem is occurring and attack problem areas.