Personal Finance Tips – Where All Your Money Goes
Many people having really good salaries wonder where all their money goes? Very often high-earning people are regularly strapped for cash, live paycheck by paycheck and don’t even have enough savings to meet their unexpected expenses. This is because people usually have no idea exactly where their money goes, and have even fewer clues about how to spare the money they already have. Actually there are a few really simple and straightforward methods to examine where exactly your earnings go.
The first thing you should do is to have a very clear and detailed picture about your spending habits. Most people spend way more money than they would think, and it is harder than you might think to keep track of each dollar. Lots of people have a budget, but keeping track of your monthly bills – loan payments, utilities, insurance, credit cards or groceries – is not enough to find out why you don’t have money despite the fact that you earn a lot.
If you really want to know where your money slips through your fingers, you should track every payment you make – no matter how small it is – for about a week. This means everything, from the monthly bills to the $1 soda. You must keep the receipts and write down immediately every expense you had. At the end of the week, add everything up: you will be surprised how much money you spend buying really small things that you may not really need. You can get an even better picture if you continue this experiment for a month. At the end, you will be able to decide which items are useless.
This way, you can redirect a part of your spending towards wealth building. Don’t be ashamed to start small: it is really easy to take out $5 or $10 each week from your spending. This is all it takes to start your journey towards creating a healthy balance between your earnings and spending. However, no matter how small the amount of money you have, don’t keep it in a cookie jar: you should keep all your savings in an interest-bearing savings account or you can open a separate account. Your money should work for you day and night, and every day your money spends in the jar is a day you don’t earn any interest from it. This is hard only until you get the taste of saving. After you start to enjoy the feeling you will be eager to save more.