How to guess what you are spending before budgeting or tracking your expenses
When you first start budgeting and you have NEVER tracked your expenses, it can be hard to know what you are really spending on things like gas, food, and eating out.
Here are a few things I’ve observed over the years.
YOU ARE ALWAYS SPENDING MORE THAN YOU THINK
Think about what you think you are spending on food.
Now double that number, and that’s probably closer to the reality of what you’re actually spending.
Some people think they only spend “$200 or so” on food, but the reality is more $400 – $500 on food.
YOU NEED TO START TRACKING YOUR EXPENSES
You don’t know what you don’t know.
Enough said about that, I think.
MONEY GOES FASTER IF IT IS ALL IN CASH
For those of you who love to spend cash and not on debit or credit, then you have absolutely NO paper trail of where your money goes each month if you don’t track your expenses.
If you take out $500 a week, you are apt to spend it all without knowing where it went.
A lunch out here, a new DVD there, and before you know it, you’re trying to scrape by on $0.75 for a week’s of groceries before the month ends.
YOU MAY NEED TO START SEPARATING YOUR EXPENSES
A lot of people go to the grocery store and buy food in addition to:
- Flowers (I know a guy who does this for his wife once in a while, he’s really sweet)
- Household Supplies
- Home Accessories (Towels and the like)
All of the above is all NON-FOOD related, but it’s grouped under “FOOD / GROCERY” in your budget when you just look at the store name, or if you track your spending online (they can’t separate out your line items).
So you have no clue what actually goes under “FOOD”, and into your belly each month in addition to eating out.
This is why if you really want to know what you spend each month in each category, you need either buy each category separately, or manually calculate and split the amounts for every bill.
BUYING EACH CATEGORY SEPARATELY
This is where you throw everything you want to buy on the conveyor belt, and pay for all the Food items only, and then pay for all your Household items separately, and Toiletries separately.
PROS: You can just look at the final number on your receipt and put that as your amount in your budgeting spreadsheet.
CONS: People behind you, will hate you for having to buy all this stuff, and pay for each category SEPARATELY and hold up the line. You may also incur more banking costs if you are charged per transaction, or have a limited number of transactions.
This works best if you can self-checkout and you won’t incur any banking charges by doing each shopping trip separately.
MANUALLY SPLITTING EACH BILL
This is what I do, because I don’t tend to buy a lot of stuff at once, all at the same store.
How it works, is you buy everything (hopefully grouped as much as possible into their categories while on the conveyor belt), and then you go home and do the calculations with taxes.
(Food generally has no tax applied to it, unless you’re buying “non-essential” food like snacks or pop).
PROS: You check out once, and you have everything on one receipt.
CONS: You have to do the math at home, manually. Think of it as brushing up on how to calculate taxes, and a lesson on what is taxable or not.
Just a few of my observations. They seem to ring true for most folks.