The Most Effective Way to Cut Your Spending

After taking a free personal finance course offered online by McGill University (click here for details), I have decided to finally gain control of my finances and put an end to the ridiculousness of my spending habits!

One of the modules was on budgeting and the instructor suggested listing all your income and all your expenses. So for the FIRST time ever, I actually put the time and effort into this tedious task.

And friends, I am S-H-O-O-K-E-T-H!

I printed our bank statements for the last 2 months and entered our income and expenses, item by item, into a Google Spreadsheet document. Believe me when I say that it was so painstaking that it took my husband and I two evenings.

In the end it was totally worth it because it turns out to be quite an eye-opening exercise!

Over the years, I have made many attempts to “budget”, usually through an app, or a free downloadable excel sheet from someone’s website. My bank even helps populate your expenses and creates a visual of where your money is going. The McGill course I mentioned above also provides a budgeting tool.

None of these have ever clicked in the past because for me, there is something about doing the work from scratch on a blank spreadsheet. No fancy formulas, no bells and whistles. I can create rows and columns that make sense to me, and are personal to my unique situation. I can also restructure the chart as I go.

I realized that in my case, I needed to itemize our income and expenditure before making a budget. Allocating a budget first just was not working for me.

Before doing this exercise, I had assumptions about my spending habits. I thought FOR SURE that most of my money went to eating out, but nope! FAR from it.

1. Groceries (apparently buying in bulk can quickly turn to spending in bulk), and
2. Amazon ate up a big chunk of our income the past two months!!!

I saw this doormat and it made me LOL! I’m an Amazon Prime member and I’ll confess to receiving a package, or two, or three per week.

Needless to say, change is coming! It has to, because as the “Chief Spender” in my household, our financial freedom depends on me!

No pressure.

If you’re having a challenge with spending, why don’t you try listing your income and expenses. It will highlight areas of unnecessary spending, and areas of potential savings very clearly. Also try subtracting your expenses from the your income and seeing if you are overspending each month.

I guarantee you, it will make you think twice before you purchase anything using using 1-Click Ordering! Lol.

I plan to do this tracking-only method for one more month before allocating $ amounts to each spending category. I think the budget will be more realistic this way.

Have you managed to kick a spending habit to the curb? Do you have any budgeting tips, tricks or tools that have worked for you? Please share if you do!

Love,

yecc81yecc81-2

4 thoughts on “The Most Effective Way to Cut Your Spending

Add yours

  1. Thank you for this. Another reminder that we need to take this financial literacy seriously. Let me go and make my Christmas budget in relation to my income.

    Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

Blog at WordPress.com.

Up ↑

%d bloggers like this: