Introduction to the Budget Club
Step Two

Step two of the challenge involves two parts. The first one will take you under an hour to complete, the second part will take you a month! Yikes! It’s not hard though!

First I want you to fill in our monthly budget sheet with the amounts you THINK you spend and earn. Don’t stress too hard on this part, we are just going to compare it with our actual list of expenses at the end of the month.

I bet most of you thought we were going to write a budget in the first part didn't you? Nope. How can you write a budget if you don't know where you actually spend your money? I know you think you know where you spend your money, but after this exercise you'll be amazed at how much money you are wasting.

Part two involves keeping track of all the money you spend this month. I don't want you to run out and buy any expensive tracking software or anything. You need two things: Some paper to write down each days expenses, and a little notebook to keep track of stuff when you are out of the house. You will be writing down the date, what you bought or paid, and the amount.

I want you to set aside ten minutes each day to record all of your purchases. Some days it will only take two minutes, just make sure you do it everyday. We are trying to form new habits so don't wait until the end of the week to do everything.

Let's start at the beginning of our day. Most of us stop at the coffee shop and pick up a latte. Okay, write it down, if you don't have time, make sure you get a receipt. After working for several hours we go out to lunch with a friend, there's another expense. We have to pay the parking garage when we leave the building, write it down. See why the little notebook is handy? We pay for a lot of things with cash and we don't get a receipt because we don't want the car to be filled with them. Just write it down in your little notebook.

Once you are home, dinner is cooked, and the kids have a bath, you can relax. Just take your little notebook out and transfer everything to a larger sheet of paper. If you pay any bills that day, make sure you write them down also. Don't try to categorize anything right now and don't write anything down as cash. You don't buy cash, you spend cash, we want to know what you spent it on. The important things on the list are the date, the amount, and what you bought. Keep a separate column for money that you earn such as paychecks and bonuses.

Now let's deal with Wal-Mart. Huh? We all have that one store where we go in for one thing and end up spending two hundred dollars. For me it's Wal-Mart. You can write this expense down two ways. You can write it as one receipt or you can separate it into several. I separate it into several. We always buy our diapers and other personal care items there. That's one receipt, I call it my necessities. The other things I buy, like cookies, film, flowers, etc, go on separate receipts because we don't always need to buy these things, so I want to know how much we are spending on them.

How do you deal with ATM withdrawals? Like I said before, don't write it down as cash. If you take $20 out and you spend $15.75 on lunch, write down the $15.75 that night. The next morning instead of going to the ATM to get money for your latte, you already have cash to use, so write down the price of the latte.

What about things you use a credit card for? Write them down in your notebook just like everything else. What we are doing is seeing what kind of spending habits you have, so that you will be able to write a budget that will work for you.

What about expenses that come out of your paycheck? Don’t include these just for the sake of simplicity. These expenses are automatically budgeted for you, meaning you don’t have to deal with the money yourself, so we can rest assured the expenses are taken care of!

Don't forget expenses like bank fees, ATM fees, and bills that are automatically deducted from your checking account.

Sound easy enough? You don't have to cut back on spending or anything (yet), just keep track of where your money is going. Once you see how much you are spending in each category you will be able to write a budget that works for you. The importance of this step shouldn’t be overlooked. In order to stick with a budget, it has to be reasonable for you, not for anyone else.

Part of the Womens-Finance Budget Challenge!

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