Where Does It All Go?

Money seems to dissipate at an unprecedented pace- at least in my life.  By the time I’ve paid the rent, bought my groceries, and accounted for my transportation for the month it feels like I’m back at zero.

Two years ago I decided to take charge of my financial situation by writing it all down.  Every dollar, every penny.  Now I’m hooked.  I don’t think everyone needs the five spreadsheets that I have in my excel file, but I strongly believe every person should write down every penny they spend for at least a few months and observe where it all goes.  When you see it all laid out in front of you, I think you gain some perspective and learn something about yourself.

You learn what you value.  The things that you pay off immediately from your checking account or with cash are your number one priorities.  The things that you put off, charge to credit, allow to sit unpaid, those are your least valued.  If you’re looking over your finances and finding that your spending doesn’t reflect your top priorities, it might be time to reasses.

Did you purchase a pair of designer jeans before paying off the doctors visit that you charged to your credit card last month?  That’s fine if you value your style more than your health.  I’m not saying what you should or shouldn’t value more than anything else, but I do believe the way in which you pay down what you owe should reflect your order of priorities.  If having a cup of Starbucks coffee everyday is a greater priority than your student loans, then keep grabbing the Starbucks.  But if not, take some action and adjust your spending.

I'll start by listing priorities from top to bottom.

At the top of my list is shelter, food, and transportation.  These are my basic needs and therefore my top priorities.  My non negotiables.  There’s a number of categories that support these basic needs- electricity, heat, water, gas .  Then my cell phone.  Next up is my savings- putting into my emergency account and putting what I can into my retirement account. My internet connection is up there along with my business expenses,-web hosting, professional training, resume printing.  Then personal care products and household cleaning products. Then the social expenses, going out to dinner, grabbing a drink, buying a birthday gift.   And finally, my luxuries.  The netflix subscription, new clothes, massages, vacations, the occasional cup of tea or glass of wine while I’m out. 

There may be some things reflected in your expenses that don’t coincide with your list of priorities that are difficult to come to terms with.  In creating my list I notice one major discrepency between my spending and my values.  I don’t have health insurance.  Do I really value my netflix subsription over my health?  I’d like to think not, but according to the last two years everything I’ve done supports that conclusion.   Well, maybe not everything.  Despite tight funds I’m always willing to pay more for organic and local produce.  I also will invest in a new pair of running shoes every so often.  So my preventative healthcare is up on the list with my non negotiables.  It’s the rest of it that I need to get in check.  Thus far eating right and working out has served me well but if anything serious were to happen to me I’d be screwed. 

Writing it all down can illuminate areas of your life that you may be neglecting in favor of other, more trivial expenses.  I know it did for me.   And more importantly you can actually see where your money goes.  The more I see where the money goes and how much things cost, the more I value each and every dollar and think smarter about how to spend it.