Manage Your Spending

You might think you have an idea where your money goes, but you might be surprised to find out the truth. In fact, the average person underestimates his/her spending by 20%! Imagine having 20% more money than you do now; it would be nice! The first step to get yourself to that point is tracking where your money goes. You'll want to invest in something like a notebook to carry with you to record your daily spending. Resolve to do this for at least one month. To help you keep track, you might want to save receipts, use checks on purchases above a certain amount, and record any ATM withdrawals. Once you have this information, use it for the following purposes:

• To channel your income toward the most important expenses
• To find areas where you can potentially cut back
• To help you devise a monthly budget for your finances

Take Control: 6 Ways to Cut Your Spending

Here are six tried-and-true ways to take control of your spending and finances.

1. Write a list and stick to it. Before you shop, take time to make a list of what you need and then make sure you stick to it. Make a pact with yourself that you will not buy anything that is not on your list. Store layouts, coupons, and advertisements are all ploys to get you to buy what you really do not want or need. Resist these enticements with your list.
    
2. Shop on an as-needed basis only. Shopping should not be for pleasure or leisure if you're trying to control your spending. Instead, shop only when you actually need something. When you're shopping for fun or other emotional reasons, you are a prime target for superfluous impulse purchases and other shopping indiscretions. Shop for utility, not pleasure.
    
3. Never buy on impulse. Ever bought something on a whim then had to face the buyer's remorse a few days later? The best way to avoid this is to stop impulse buying. Impulse buying is a huge waste of money, and it will fill your home with things you regret buying and never needed anyway! Following guideline #1 can help curb impulse buying.
    
4. Consider renting or borrowing instead of buying. When you think about buying something, ask yourself if you could instead rent or borrow the same thing for less? The key question to ask is if you will use the item enough to warrant a purchase.
    
5. Think about alternative items. Before you buy something, see if there is a less expensive, alternative item available. You might consider a cheaper model of the item or even buying the item used. The Internet is a great source for second-hand goods, as are the classifieds in your local paper.
    
6. Don't rush in. Don't rush into any significant purchases. Take time to leave the store and think about it; perhaps even sleep on it. Never buy under pressure.