Where did your money go?

Unless you know how you are spending your money, you cannot budget and you cannot control where your money goes.


Controlling
Once you know where your money is going, you can start to control it. This process is very personalized, as each of us spends money differently. We also have certain expenses that are critical to us, but might be wasteful to someone else. Sand paper and stains might be critical to you if your passion is refinishing furniture, while someone else might find camping and hiking supplies to be much more important.

The key is to see how you are spending money, that way you can budget it and control it. Your passion may be fishing, but when you see you are spending $1,500 a year on new gear, you may see a problem. You might love woodworking, but the $2,000 you spent on new bits, tools and accessories could be a little overwhelming.

Once you see where your spending is, you can start to develop your budget - your plan of where you want your spending to be. This is your control phase; this is where you start getting your financial house in order. There is nothing wrong with spending money on eating out, movies, or fishing gear. There is something wrong when you spend so much on these activities that you are not saving money, or that you are running up your credit card to finance your way of life.

Your budget helps you focus your spending, targeting your efforts against the bad habits. Focus, whether at work or in your finances, helps make sure you are not wasting time just spinning the wheels. That keeps you from getting crabby because, really, isn't life too short to be crabby?



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