It’s Time for a Personal Audit of Your Frugal Living Budget
by Daisy Luther, The Organic Prepper
When is the last time you sat down and took a very close look at your budget? And by close, I mean an accounting of every single dime you spend, including that drive-thru coffee and the paperback you bought that you could have borrowed from the library. There’s no reason you shouldn’t run your home like a business, and that includes keeping detailed financial records and performing a personal audit of your frugal living budget.
Even the most dedicatedly thrifty people can get off track, particularly when times are good. You figure that you just got a big bonus check, so it’s not going to hurt to go out for ice cream. Then you go to the store and decide, you’ve got extra money, so maybe you’ll just buy whatever you want instead of adhering to your normal weekly budget. You decide to live a little, enjoy life, and the next thing you know, all of that extra money is gone and all you have left is a few extra pounds on your waistline or a new frivolous gadget.
And you’re right, indulgences are absolutely fine from time to time, as long as they don’t take away from your necessities. But instead of working the treats into their frugal strategies, many people get completely off track when a bit of extra money comes their way. If you aren’t careful, indulgences can become habits that can undo your progress towards a frugal, debt-free lifestyle.
As the economies of the world take hit after hit, it’s not a far stretch to believe that it could also happen here. Michael Snyder recently issued a “red alert” for the second half of this year with regard to our economy. We’ve been watching as the price of every single item in Greece has a 23% tax added to the top while wages and pensions are cut by as much as 40%. In Venezuela, basic goods like toilet paper and laundry soap are increasingly hard to come by and outrageously expensive if you can find them. While many believe it can’t happen here, we’d all have to agree that getting a job – a good one, not minimum wage – and keeping it, is far more difficult than it used to be. As well, prices are skyrocketing due to droughts on one side of the country, increased fuel prices everywhere, and floods on the other side of the country.
After moving and incurring some unexpected expenses, I had to sit down and take another look at my finances. My expenses have changed because I’m in a different house, so I had to take this into consideration and completely revamp my current budget. But it doesn’t take a move from the suburbs to a farm to change your expenses – many times, things start creeping up so incrementally we don’t even realize it’s happened.
It’s time to do a personal audit on your finances.
Figure out exactly where you are
How do you do most of your spending? If it’s with your debit card, it will be pretty easy to get started immediately. Simply print out your records for the last month, and then move on to the next step.
If you spend a mixture of money from your bank account and cash that you have on hand, you may have to get a notebook and start tracking your spending, then move on to the next step in a couple of weeks.
It’s vital to note every single dime you spend. Like a leaky faucet in a bathroom few people use, it’s those tiny but consistent drips that add up to an astonishing amount of gallons of waste.
Now, organize your spending into categories.
I use categories, then subcategories:
1.) Fixed Expenses:
These are expenses that don’t change from month to month, like: mortgage, rent, property taxes, cable bill, car payment, insurance.
You can then break these down into 2 subcategories.
- Optional expenses
2.) Variable Expenses:
These expenses can be adapted to fit your financial situation, and sometimes even eliminated if necessary (obviously the need for things like food can’t be eliminated, but you can spend more or less money when adjustments are needed): food, utilities, clothing, gasoline, entertainment.
Again, we can break these into subcategories based on how vital they are.
- Optional expenses
All of your spending will fall into these categories and subcategories.