Know Where Your Money Is Going
As a saver and conserver, I've always been on top of my check book. I'm not one of those people who have only a vague idea about how much money they have left in their account. I've never overdrawn any of my accounts. One might say I'm very anal about keeping track of the bottom line. And one would be right.
However, being anal about your bank account balance doesn't equate with saving money. In order to start to reduce the amount of money you spend, you first need to know where you spend your money.
At the beginning of 2007 my fiancee and I decided to start keeping track of our spending by creating a budget. We somehow stumbled upon PeachBudget, and it's turned out to be an easy-to-use, valuable tool that tells us where we're spending our money.
PeachBudget is a simple Microsoft Excel file with multiple, linked worksheets. You create spend categories like: rent, transportation, groceries, etc. and allocate a monthly spending target to each category. Then, as the month progresses, you simply enter in your individual costs. At the end of the month, PeachBudget tells you how much you spent in each category and whether or not you exceeded your budget amount.
As I said, in order to start saving money, you first need to know where you spend money today so you can stop bleeding cash. So, the first few months of using PeachBudget is really more about diagnosing the problem (identifying over-spending). After the diagnosis is made, you can switch to action mode and start to tighten the purse strings where necessary.
PeachBudget: a free tool you can use to profile your spending ways.
