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Blow Your Mind: Track Your Spending For 30 Days
The average person makes anywhere from 100 to 200+ transactions per month. It’s unlikely that the average person can recall each and every transaction they’ve made over the last month (heck, sometimes I can’t even remember what I DID yesterday let alone what I spent money on).
Having a short memory makes us terrible at understanding our spending habits. Some people are natural budgeters, they can recall perfectly what they spend their money on. But for the majority of us, we need to track our spending to understand where our money is going.
Tracking your spending doesn’t have to be difficult. With the help of technology it can be super easy. Even going old school with pen & paper isn’t that difficult.
Tracking your spending is the only real way to understand your spending habits and make changes.
Attention Financial Voyeurs! See Our 2018 Family Budget
I’m not sure what it is, but I love reading about other peoples’ personal finances.
Maybe it’s because talking about our personal finances is somewhat taboo.
Or maybe it’s because I’m a personal finance geek and I love to see how other people organize their financial life.
Whatever the reason, I love learning about another person’s finances.
Because I know there are other personal finance “voyeurs” our there I thought it would be fun to share a bit myself. In this blog post I’m going to give you a glimpse at my own personal finances and share my family’s budget for 2018.
Three times a year my wife and I sit down and review our financial plan. We go over our investments, our asset allocation, our income and our expenses. We make small changes and tweaks to ensure we stay on track with our overall financial plan. Having a solid budget is an important tool for achieving your financial goals.
So, without further delay, here is my family budget for 2018.
Creating A Budget? Focus On The Big Stuff
When creating a budget, it can be very tempting to get into the nitty gritty right off the bat. Don’t fall into this trap!
The majority of our spending is driven by just a couple of things, accidentally focusing on the small stuff can be a real time waster. Even worse, spending too much time on the small stuff can be very frustrating, it could cause you to abandon your budget all together.
When you look at average household spending are certain patterns that emerge. Some budget categories are very small and some are very large. This obviously varies from person to person but in on average the trend is very clear. There are just three budget categories that make up almost 70% of annual spending.
Those three categories are housing, transportation and food.
When you’re trying to balance your budget, it helps to focus on these three categories first.
Why?
Improvements in these three categories will give you the biggest savings for your effort.
These three categories represent the “big stuff”. They make up the majority of your spending. Even a small improvement here can make a big difference to your overall budget.
As a bonus, improvements made in these three categories are easier to maintain. After making a change its typically easier to sustain spending reductions when it’s in housing, transportation and food.