A common dilemma shared by many of my clients is their frustration in keeping track of their monthly personal spending. No matter how many excel spreadsheets or Quickbooks/Quicken reports they run, it seems that there is always a mystery to solve between what their budgeted expenses are as compared with their actual spending.
Often times, I find that after doing an analysis of their habits and spending methods, the most likely culprit behind the confusion is the debit card. Although convenient, the debit card can be counterproductive when it comes to managing already tight spending budgets.
With each swipe of the debit card, it's hard to actually keep track of the precise amount of money spent - in many cases, clients are surprised at how much they end up spending when all of the debit card swipes are added up and calculated.
One suggestion I make to my clients which many find extremely useful and enlightening is to substitute the debit card with actual cash, at least for a trial period, for example one week.
At the beginning of the week, go to the ATM (or bank) and withdraw $100 (for round number purposes). Place the cash in your wallet and use it INSTEAD OF THE DEBIT CARD. Keep all of your receipts. Of course, depending on the individual case, some will exhaust the $100 faster than others but the tactile experience of handling cash is significantly different than a swipe of a debit card. Also, once you've spent $100 in cash, you know exactly how much you've spent...compare this with how many swipes in an average spending week can quickly add up to or exceed $100. Since the latter is not a tactile experience, it is easy to forget or to lose track of how much money is spent.
Try to spend $100 cash increments at a time and for each $100 spent, go through your receipts to get an idea of what you're spending your money on...often times the discrepancies come from the multitude of smaller expenses that normally go unnoticed instead of coming from larger expenditures.
Give this method a try if you find yourself trying to figure out where your money actually goes each month. Good luck and great success!
Often times, I find that after doing an analysis of their habits and spending methods, the most likely culprit behind the confusion is the debit card. Although convenient, the debit card can be counterproductive when it comes to managing already tight spending budgets.
With each swipe of the debit card, it's hard to actually keep track of the precise amount of money spent - in many cases, clients are surprised at how much they end up spending when all of the debit card swipes are added up and calculated.
One suggestion I make to my clients which many find extremely useful and enlightening is to substitute the debit card with actual cash, at least for a trial period, for example one week.
At the beginning of the week, go to the ATM (or bank) and withdraw $100 (for round number purposes). Place the cash in your wallet and use it INSTEAD OF THE DEBIT CARD. Keep all of your receipts. Of course, depending on the individual case, some will exhaust the $100 faster than others but the tactile experience of handling cash is significantly different than a swipe of a debit card. Also, once you've spent $100 in cash, you know exactly how much you've spent...compare this with how many swipes in an average spending week can quickly add up to or exceed $100. Since the latter is not a tactile experience, it is easy to forget or to lose track of how much money is spent.
Try to spend $100 cash increments at a time and for each $100 spent, go through your receipts to get an idea of what you're spending your money on...often times the discrepancies come from the multitude of smaller expenses that normally go unnoticed instead of coming from larger expenditures.
Give this method a try if you find yourself trying to figure out where your money actually goes each month. Good luck and great success!
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