Do you earn a good income and at the end of the year ask yourself “Where did all my money go?”. I can see you sitting there nodding right now. You can take comfort in knowing that you are not alone as this is a very common puzzle for people. “Where does my money go?

So where does all your money go? Surely you can’t have spent it all …. or have you?

The trick to being successful with your money is to have control over your money. To do this you have to know where it is going. If you don’t keep an eye on it, it will run away and disappear into a black hole. There are holes in your wallets and purses that you probably just can’t image being there. You have to treat each piece of money like a piece of gold that you don’t want to let go of.

Here are some clues for you to consider so you can start to keep an eye on where your money goes

1. Try and identify what portion of your money is going on fixed expenses (such as bills and loan repayments) and what portion of your money is going on lifestyle / discretionary spending (such as groceries, entertainment, eating out, clothes)

Note down the expenses that you have to meet; such as bills, rent, mortgage payment, loan repayments etc Note down the expenses that are nice to have but aren’t absolutely critical. We will call these lifestyle / discretionary expenses (such as groceries, entertainment, eating out, clothes). How much of your money is being spent on lifestyle / discretionary expenses? (Lifestyle / discretionary spending is the area where most of the runaway money escapes from). How do your lifestyle / discretionary expenses compare to the money you are spending on fixed expenses / bills? Look for ways to reduce your lifestyle / discretionary expenses

2. Spend the time doing up a proper budget which will look at your likely future income and expenses

A budget should be a thorough record of all of your expenses across all areas such as fixed bills / commitments and lifestyle / discretionary expenses Ensure your budget is realistic and achievable Limit what you spend on lifestyle / discretionary expenses as this is optional spending and an area that you can get carried away on Allocate money in your budget for all foreseeable expenses and set some money aside for emergencies Don’t forget to provide money for items such as replacement of capital items such as buying whitegoods, repairs / renovations to your home In your budget put a portion of your money aside for savings In your budget include provision for funds to meet any goals If your budget runs into negative / deficit, then you will need to cut down your lifestyle / discretionary expenses or other optional spending until you reach at least a break even point

3. Look at your money habits

Try and identify particular times where you might be a bit frivolous

When you are in a particular mood When you have occasion to celebrate When it is someone’s birthday During particular times of the year Over festive seasons – Xmas / Easter When on holiday / away for weekends Out with certain friends / family members

Think about your pattern of spending

Do you spend first and deal with the consequences later? Do you shop around for a bargain? Do you stop and think / sleep on it overnight before rushing into a purchase? Do you ask for discounts off standard prices

4. Start to keep a record of what you are spending

Carry around a little note book and make a conscious effort to record what you spend cash / money on over a period of time Fill in your notebook on a daily basis updating it as you spend cash / money Review your notebook at the end of the day / week Keep all your receipts and dockets in one central place Use a spreadsheet to track your expenses and bills Track your total expenses over a week, fortnight, month Really keep an eye on your cash as this is what will vanish – you break into a $50 and before you know it you have coins rattling around in your wallet / purse Analyse what you have recorded and try and identify particular patterns / habits Make a particular note of any areas you are overspending Don’t stop doing this until you can say with confidence that you know where your money is going

5. Look for ways to stop the leakage such as

Following your budget Using money jars / envelopes for different expenses such as groceries, eating out, hairdressing, clothes etc Using separate bank accounts for different purposes such as bills, lifestyle, holiday, savings etc Setting up automatic transfers to distribute your pay to separate accounts for different purposes such as bills, lifestyle, holiday, savings etc Giving yourself a set allocation for lifestyle / discretionary expenses each week Being strong and if you spend all your money one week waiting it out until the following week Paying cash for items and not using credit / debt Limiting the purchases on credit cards

6. Remove access to temptations

Take the credit card from the wallet / purse Reduce the limit on the credit card Only keep minimal funds in accounts with debit card access Don’t draw out large amounts of cash and keep it in your purse / wallet Stop access to any savings account via debit cards Remove some accounts from internet banking access Have your savings account with a different bank so you can’t get internet access to it and put the money in your spending account


By: Heather A Wood

Tags: Black Hole, Budget, Clothes, Commitments, Control, Discretionary Spending, Expen, Groceries, Holes, Lifestyle, Loan Repayments, Mortgage Payment, People, Piece Of Gold, Purses, Puzzle, Saving Money Tips, Wallets