One of the most important aspects of being frugal is to have control of your finances. You should always know how much money you earn, and spend each month. By doing this, you will be able to plan financial decisions much easier without any hesitation or confusion. Not only will this make things a lot more simple, but it will reduce your overall stress levels.
A simple review can be done in ten minutes or less. Just pick up your bank, and credit card statements and begin reviewing each item line by line. You will have three main types of expenses.
Monthly fixed charges:
Monthly fixed charges are expenses that you receive every month and is the same amount each time.
- Rent payment or mortgage
- Utilities (water, heat, electricity)
- Car insurance
Utility bills are usually based off of usage meaning the price changes, however; most utility provider companies usually have an equal billing plan. By signing up with an equal billing plan schedule, you can pay the same amount each month and if you over pay you will be credited back the amount near the end of the year. For things like heating costs, this works out because of the differences in seasons.
If you are renting, see if you can find a place with utilities included.
These are expenses which happen regularly but not on a set schedule. The problem with recurring expenses is that they can add up quickly. Keep a total of the amount as you go through your review to see just how much you are spending.
Recurring expenses would include the following purchases:
- Gas for vehicles
- Hair cuts, manicures, etc…
- Eating out
- Cigarettes or drinking
One off purchases:
Typically, one off purchases are impulse buys. This is not always the case though as sometimes you have a legitimate need for something like a tool that is a one time purchase only. When you review your one off purchases, be honest with yourself and decide whether or not it was a purchase that was a need or a want.
The most important part of your review is to ensure that your total earned income earned is higher then your expenses. If you have spent more than you earned for the month, there better be a good reason (emergency car repair, vet or hospital bill) and you must ensure that it is not going to happen again regularly.
Making it Work
A good way to stay on top of your finances is to put your monthly fixed charges and payment schedules into a calendar. You can try to do the same with your recurring expenses but it is not always as easy. For me, I tend to do my grocery shopping on Thursdays because that is the overlap day for grocery flyers and it allows me to view the current week deals as well as next weeks (if a deal is better for next week, I just wait one day and do my shopping for those items on Friday). If you want additional tips on saving money at the super market, check out the post Big Appetites on a Small Budget – Smart Ways to Buy Food.
You can set a scheduled day for gassing up your vehicle as well. I usually go for two weeks per tank of gas but if I wanted to schedule it, I could just go the same day every week and fill up whatever is needed.
The more controls you can put in place, the more in control you will feel. A lot of people admit that they do not like to think about their finances too much as it can be overwhelming. With just a little bit of effort, you can easily get in under control.