The Two-Step Approach To Keeping An Eye On Every Penny

If you are someone that struggles with debt and you are looking to keep track of so many different aspects of your family funds, you might very well think that you’ve got to earn more money.

In fact, it’s the opposite.

It’s not necessarily about earning more money to pay the bills you have, but it’s about curbing your lifestyle in manageable ways. And while most of us don’t want to make drastic changes to our lives when it comes to our budget, it’s a far better approach for us to learn the art of keeping an eye on our finances.

How often do you check your bank balance? You may very well check to see that there is enough in there and that’s as far as it goes. But instead, it’s a far better idea for you to truly drill down and focus on every penny. This sounds like a massive task, but what can you do to make sure that it becomes a habit?

Understand Each Expense

When you understand how much your bills cost to the penny, you will acquire a far better approach to budgeting.

When you truly start to understand how much each outgoing is in comparison to how much you earn to the penny, you are better equipped to make significant changes.
When you know how much your car insurance is and it’s more than you would like it to be, figuring out ways to change other aspects of your life to accommodate paying for that outgoing is a far more productive approach.
When you start to look at mileage-based insurance policies rather than your current one or make changes to your driving habits so you can reduce your fuel intake, this means that you will see the benefit in other areas of your life.

But you can’t do this until you really understand how much money comes out of your account each and every time.

Track Daily Transactions

Yes, this sounds like a very annoying task but if you did this every day rather than processing your transactions every month when you are trying to scramble together money to pay a bill, this will give you a far better idea of what aspects of your life you need to cut back on.

Make it a well-worn habit to process your transactions, either daily or weekly. If you start to get receipts, either paper or digital versions, for everything this is another approach to being aware of how much you are spending on each transaction. This gives you a far better idea of how much these things can add up, especially those little things that most don’t consider to be so important.

A good example is the cup of coffee you may buy every morning. When you start to add up how much this is every week, then every month, then bi-annually, and finally, annually, you will see how much you are spending on one cup of coffee so you can make alterations in other parts of your life. But in order to get into the habit of tracking your spending, it has to become second nature.

If you are someone who is always worried about your money, this two-step approach should give you some clarity which will give you peace of mind.

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Ken Boyd

Author: Cost Accounting for Dummies, Accounting All-In-One for Dummies, The CPA Exam for Dummies and 1,001 Accounting Questions for Dummies

(email) ken@stltest.net

(website and blog) https://www.accountingaccidentally.com/