Comments on: Research Your Spending Habits To Create New Financial Goals http://www.moneycrashers.com/research-your-spending-habits-to-create-new-financial-goals/ Personal Finance Blog, Your Guide to Financial Fitness Thu, 09 Feb 2012 20:13:00 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Techbudhttp://www.moneycrashers.com/research-your-spending-habits-to-create-new-financial-goals/#comment-14601 Techbud Fri, 03 Sep 2010 22:10:23 +0000 http://www.moneycrashers.com/?p=1438#comment-14601 I'm currently tracking all of my families spending for the month to see where all of my money is being spent. I’m currently tracking all of my families spending for the month to see where all of my money is being spent.

]]> By: Elizabeth Ihttp://www.moneycrashers.com/research-your-spending-habits-to-create-new-financial-goals/#comment-8181 Elizabeth I Fri, 15 Jan 2010 07:30:41 +0000 http://www.moneycrashers.com/?p=1438#comment-8181 I think it is crucial to figure out what you have spent the year before. However, you need to figure out what you anticipate spending for the current year to make an accurate budget. Take clothing for example, if you spent $2,000 last year on clothing. This year, make a list of all the items you need to purchase (ie. replacement clothes for work, etc). Attach a cost to each item. Then add up the numbers. This would be a realistic budget. At this point you have to do some more "analysis". If the total of "needs" is $1,500, then you need to determine if you are comfortable with this number. If it is too high, then the list of items to purchase needs to be relooked at and changed. If it is low, then there is additional money available for wants. Hence, when you go shopping for clothes, you will know two things 1) your total budget available and 2) the items that need to be purchased. Thus you will stick to your list. It is like having a grocery list. This helps to avoid the pitfall setting aside a set amount per month for clothes or spending allowance for clothes. This gives the feeling that there is around $125 for any clothes purchased per month and up to $125 can be spent per month. Thus, there is the temptation to buy clothing items that may not be needed because the money is "there", and when clothing items are needed either the money is not there or the monthly amount does not cover it (ie. you need to buy new work pants at $80 a piece, but if you purchased two pairs in one month you are "over budget". Under this constraint, you can only buy one pair of pants a month, which can be a problem if you need two pairs at once). This kind of planning and tracking can be used for everything. Once I started doing this I made better purchasing choices and spent less overall. I think it is crucial to figure out what you have spent the year before. However, you need to figure out what you anticipate spending for the current year to make an accurate budget. Take clothing for example, if you spent $2,000 last year on clothing. This year, make a list of all the items you need to purchase (ie. replacement clothes for work, etc). Attach a cost to each item. Then add up the numbers. This would be a realistic budget.

At this point you have to do some more “analysis”. If the total of “needs” is $1,500, then you need to determine if you are comfortable with this number. If it is too high, then the list of items to purchase needs to be relooked at and changed. If it is low, then there is additional money available for wants.

Hence, when you go shopping for clothes, you will know two things 1) your total budget available and 2) the items that need to be purchased. Thus you will stick to your list. It is like having a grocery list.

This helps to avoid the pitfall setting aside a set amount per month for clothes or spending allowance for clothes. This gives the feeling that there is around $125 for any clothes purchased per month and up to $125 can be spent per month. Thus, there is the temptation to buy clothing items that may not be needed because the money is “there”, and when clothing items are needed either the money is not there or the monthly amount does not cover it (ie. you need to buy new work pants at $80 a piece, but if you purchased two pairs in one month you are “over budget”. Under this constraint, you can only buy one pair of pants a month, which can be a problem if you need two pairs at once).

This kind of planning and tracking can be used for everything. Once I started doing this I made better purchasing choices and spent less overall.

]]>