You know you should save more. You want to save more — even if it’s just a little. And yet somehow, by the end of the month, you’re eating ramen and digging for transit tokens out of the bottom of your briefcase or purse (because maybe you can trade them for quarters at work?). Where does all the money go?
According to a recent Gallup survey, Americans spent an average of $87 a day in September on discretionary items. Discretionary spending was defined as anything purchased “in stores, gas stations, restaurants, or online — not counting home and vehicle purchases, or normal monthly bills.” In other words, extras.
Of course, higher earners spend more than that, and lower earners spend less. But the point is that there’s some money to be saved on nonessentials — if only we can find it.
That’s where the notebook comes in. You’ll also need a pencil or pen.
Choose Your Spending Notebook
Your notebook doesn’t have to be fancy. It should be easy to carry, easy to write in and something that makes you feel good while using it. For many, a pocket-size notebook may be the right choice, and several vendors sell sharp looking, practical little notebooks in packs of three for $5 to $10. Others may go with something bigger that tucks into a briefcase or handbag. Try to make it something that you like, and that you will use, because you’re going to live with it for a month or more.
Use Your Spending Notebook
This is easy, but you have to stick with it for it to do its magic.
Start using your notebook at the beginning of the month. This makes the accounting easy. You will also benefit from a little psychology. Researchers have found that we are more likely to start working toward a new goal on landmark dates, such as a birthday, or the new year or even just a new month.
In the morning every day turn your notebook to the next fresh page, and add the date at the top. Continue with your morning routine.
— Buy a Super Grande Iced Choco-latte on the morning commute? Write it down.
— Step out for fries and a burger at lunch? Write it down.
— Pick up the laundry, fill up the gas tank, bring home the bacon, sit down to pay this month’s bills? Write it all down.
Evaluate Your Spending Daily
At the end of the day — when you’re done spending — take out your notebook. Total up your spending for everything, and also by spending category.
Common categories might include:
— Housing: Rent or mortgage, insurance, repairs and maintenance.
— Utilities: Gas, water, electric, etc.
— Groceries: The food you prepare and eat.
— Dining out/Dining in: Your Choco-latte goes here and so does your pizza.
— Entertainment: The movies and the hockey game.
— Personal care: Clothing, shoes, visits to the barbershop and all the other stuff you buy to keep you and your family presentable.
— Health care: Trips to the dentist, the insurance payment, copays, eyeglasses, etc.
— Consumer debt: Credit card debt, student loans and installment agreements on the kitchenette set you bought.
— Car or transportation: Car payments, mass transit tokens, Uber rides, car insurance and other car expenses.
A real budget would break these categories out into much more detail, but these are enough to track spending without getting overwhelmed.
Add up your subtotals for each category and double-check against the grand total you already calculated. Do they match?
Stick with it for the entire month. Don’t give up, and don’t skip a day.
Add It Up at the End of the Month
Congratulations! By now your notebook is filled with spending details, plus daily subtotals by category. You may have some receipts tucked into the back pages that you were saving for later. Well, it’s later — write them down!
Now, add up all your spending by day (just refer to the total for each day). Next, do the same for each of your categories, and then double-check as with your daily evaluations. A spreadsheet can help with the math and the organization.
Stunned at the amounts?
It can be sobering to look back and see all the money we spend in just a month. But that’s the point. With the help of your notebook, you now have a good picture of where it’s going, and where you might be able to cut. And once you do find those cuts, you’ll be able to add a new category to next month’s edition of the Spending Notebook — saving.
Next month would also be a good time to set up a proper budget (plenty of online tools and apps make budgeting easy). After all, the first of the month is a good time to launch a new project. Plus, you already have some baseline figures — based on your actual spending habits — to get you started filling in the budget details.
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The Notebook That Will Change How You Think About Money Forever originally appeared on usnews.com
