This article discusses how people quickly and simply can discover the manner in which they are spending their money and on what they are spending it. Doing this analysis will make it easier for families to make the financial adjustments necessary to stay within their budgets. To do this household analysis, it is not necessary to understand spreadsheet programs, which are used for larger and more complicated corporate budgets.
Credit cards will allow scrutiny of expenditures in a somewhat similar manner to the method covered in this article. Credit cards, however, will not reveal cash expenditures, and there are definite advantages to making mostly cash expenditures.
Cash expenditures, for example, are more painful. Counting out money is more painful than swiping a credit card. Such pain can result in less expenditures. Many Millennials, for example, are saying “no” to credit cards.
Credit card companies also charge interest rates on unpaid balances each month. Some of these interest rates can be jaw dropping. As William Wordsworth once said, “Getting and spending, we lay waste our powers.”
In addition, credit cards can result in stolen identities. Many large stores have had the credit card information of their customers hacked.
The first step in this budget monitoring process is to write down, at the end of each day, every cash expenditure made. A miniature recorder makes it easy for people to record how much they spend each day on items such as coffee, restaurants, gas, and groceries. As people pay cash for various items during their day, they record the item and how much it costs.
At the end of the day, people can use these recordings to make dated entries of all their purchases by using Microsoft Word, the use of which most people understand. Group expenditures such as groceries can be more specifically analyzed by keeping the store receipts of foods items purchased.
Most items purchased, even with cash, will have receipts. The financial monitoring system described in this article, however, is simpler than keeping and analyzing hundreds of hard copy receipts of items such as coffees purchased.
How can you harness computer power to achieve budget scrutiny by using computers? There are many ways to analyze expenditures. This article will give just a couple of examples of simple ways to scrutinize household cash expenditures.
Consider, for example, a couple who eat out in restaurants often. By typing “restaurant” into the find box of Microsoft Word, they could find all of the cash expenditures on restaurants for daily, weekly, monthly or yearly time periods. It can be shocking to discover how much more it costs to purchase meals in restaurants than it does to eat meals at home.
Consider also cash expenditures on gas. If gas costs are stable, a spike in monthly gas costs might mean, for example, that a family needs to do more shopping per car trip. It also might mean that it is time for a car tune up.
What types of expenses would you like to monitor? Please comment below.