This question was recently asked of me by a client. Let’s first look at what comes to mind when we think of a budget. Most people think of the basics, housing costs, utilities, auto expense, food, and our children’s activities. You look at your income and then figure out the difference. That is not the whole picture. When we look at how you are living your life, we also want to know things like:
How much do you contribute to charities? How much do you spend on personal care? What about pet care? Vacations? Phone? Cable? Taxes? How much does inflation add to your costs? These are the items that “nickel and dime” our bottom line.

An easy way to track your spending, because that is what really matters, is to put yourself on a cash only diet. For a two to four week period, you only use cash. Not for the big things like paying your mortgage, but everything else. Pay cash for gas, food, entertainment, coffee, and clothing, whatever you may purchase. Keep your receipts, then review. You will get a good look at exactly where the money is going. I have also found that when you spend actual cash vs. using a card it is more real. This method can also help you determine if the purchase is a need vs. a want. Track the cash flow, then you can keep your budget on track.

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