Spending Habits: Episode I of Pinching Pennies



By Olivia Sielaff, Finance contributor

How many times have you looked in your wallet only to find an empty pocket staring back at you?

When this happened to me I usually just shrugged and told myself to wait until some new money appeared in my purse. But it wasn’t until I realized that unless I made an effort to manage my money, I would just keep repeating the same cycle: make money, purchase the next thing that was on my list, spend until I run out of money for the month.

Ladies, if you’re often left wondering where your money has disappeared to so quickly, it’s time to revamp your wallet and take care of your Franklins (or just Jacksons) so they stick around a bit longer.

Learning how to manage, budget, and save your money is an essential aspect of life. You don’t have to be a money guru or savvy stock-market analyst to save a little extra cash. But you do have to be disciplined and goal-oriented. In these next few articles, I’ll be sharing ways for you to make your financial goals happen and be responsible with the monetary blessings God has given you.

Budget mindset

The first step to being responsible with your money is making a conscious effort to track what you do with your moolah.

If you don’t make an effort to watch your money, then it might as well just blow away with the wind.

This idea of keeping a record of your finances is usually called budgeting. At first this word seems kind of boring, making me think of spreadsheets and mathematics. But have no fear!

“A budget is a ‘GPS’ for your money,” says Natalie Wise in her article on values-based budgeting for Darling magazine. “It tells you where your money is coming from and where it is going.”

With this kind of mindset, think of budgeting as setting a destination for your money, how you’re going to get there, and what stops you may need to make along the way.

Track your spending habits

So, here’s how to get started.

For the next three months, track hardcore every expense you make. I mean everything ... even that $3 froyo, or those 50 cents for the parking meter. Ask for a receipt every time you make a purchase, or write down each expense in a small notebook. Look over your bank statements, too, for any loan or credit card payments that are drawn from your account. All this will help you see where you’re spending and what you’re buying.

At the end of each month total up all your expenses – this is where the receipts come in handy. If you find a pattern to your purchases, organize them into categories – such as transportation, entertainment, or coffee – so you can see exactly how much you’ve spent in each area of your life. You might be surprised to find where your money is going (or isn’t).

It’s helpful to make a document to keep things organized. Check out Wise’s article for her take on a simple budget spreadsheet you can create. Or try www.mint.com, a free, personal finance site/app that securely connects to your bank account to log all transactions from your credit cards and checking account.

The importance of budgeting

One of many excuses I’ve made when trying to track my money is that I don’t have a steady income, or have hardly any income. Say you only work during the summer in between school, or you don’t have a job at all; it’s often difficult to log your earnings. Sometimes you don’t really know when it will come in.

So why should you track the money you rarely have?

There are two reasons that this is important. First, budgeting gets you into the habit of paying attention to your finances. Without monitoring your bank account or your wallet you’ll be broke before you know it. Second, once you start paying attention you’ll be better able to manage your money and tell it where to go (remember the GPS). 

In any case, it’s very important to keep a record of your money for at least three months so you can determine an average of your expenses. This will help with the second step of budgeting, which we’ll get to in the next article.

Until then, commit to monitoring your spending habits and you’ll be in the best position to move forward with budgeting and planning your financial goals.