Budgeting

Is budgeting a dirty word at your house?

Most of us think that we don't overspend (OK, maybe secretly we're afraid that we might), but we don't have a good handle on how much "discretionary spending" we actually do, because we're far too busy to keep track of every penny we spend.

And that's precisely why, before we get to the end of the month, we find we've reached the end of our money!

So, exactly how do we go about figuring out how we can spend less money?

The first step to reducing your spending is to discover how you're currently spending the money you have. And I use the word "discover" because most of us really don't know how our money is being spent -- we just know that it is!

The best way to determine how your money is being spent is to make a concentrated effort, involving the entire family, to write down exactly how much you spend every day (to the penny) for an entire month, and what you spend it for.

You don't have to start at the beginning of the month, but you do have to start! Today would be a good time (or tomorrow if it's already late today).

For the first month, just make an honest record of how much your family typically spends, so you can find out where your money is currently going. You may want to create categories before you start your list, so you don't find yourself calling the same expenditure by several different names.

For example, you might use these categories:

Groceries
Meals Out
Housing (include rent or mortgage payment, electricity, water, etc.)
Auto (include insurance)
Clothing (include dry cleaning)
Child Care
Medical (include health insurance)
Personal Care (items such as hair cuts, manicures, makeup, personal grooming items, etc.)
Entertainment, etc.

This is by no means a complete list. It is just designed to get you started. Sometimes, just having to figure out a category to put the expenditure in is enough to make you question whether it's a necessary expense.

Then, if you have kids who are old enough to start learning about spending their (and right now, your) money, you may want to make this a family game, to see who spends the least amount every day. Make up a chart, or if you're good with computers, an Excel spreadsheet, that lists each family member, and a place to record each expenditure he or she makes for the day.

You can create a daily sheet, which will have everyone's name on it and a place to list what they spent that day, or you can create a monthly sheet for each family member, so that person's expenses are all on the same sheet. If you have teenagers, this might prove useful for some budgeting discussions with them, too.

When you sit down for dinner (and I hope your family does make it a point to sit down for dinner together most days, because that's such important family time), go around the table asking each person to report how much they spent, to the penny, and what they spent it for. (Family members will need to record the amount each time they spend money, because relying on memory for what you spent all day doesn't work.)

You may meet some resistance to this, but if you have a family member who is spending money on something he or she doesn't want the rest of the family to know about, that's a whole different problem. If you have one of those teens who insists on her privacy as it relates to her siblings, let her report to you separately on things she doesn't want her siblings to know about. But make sure she is accountable for every penny.

To make it more fun, and more competitive, you can create an inexpensive weekly prize for the family member who spent the least amount of "frivolous" money -- this can be something as simple as you agreeing to do their least favorite chore for them, in exchange for their contribution to saving money.

Or if you have a larger family with several kids, you could make the one who did the most frivolous spending do one chore for the week for the child who did the least frivolous spending. The key is to make it something that will be fun, encourage competition, and stress the importance of being aware of how much you spend every day.

Let me stop right here and remind you that just because you still have checks does NOT mean you still have money!

Some of you will laugh at this, but as I began doing research for this program, I encountered a number of sources, both officer and enlisted, who told me I needed to include that as one of the lessons we teach. I, too, laughed, and said, "You've got to be kidding me!"

I didn't realize that our program needed to contain such basic financial education, but I've been assured that it does indeed need to start at that basic level. Perhaps other programs make the same assumption, so no one includes very basic money management.

In all seriousness, these people explained to me that they had members in their units who were in financial difficulty because either the service member or their spouse didn't understand that there has to be money in your checking account before you can write a check.

So, you've now been reminded: Just because you have checks doesn't not mean there is money in your account to cover all the checks you can write. For example, there's nothing to prevent you from writing a check for a million dollars. But how likely is that your bank will honor (pay) that check?? Ah, there's the problem.

AND, as a former prosecutor, I'll also remind you that writing checks that you don't have the money to cover is a crime for which you can be prosecuted, both in the military and civilian courts. The only thing that needs to be proved is that you knew at the time you wrote the check that there was not enough money in your account to cover it, or that there wouldn't be by the time it hit the bank. That's very simple to prove with your checking account and ATM records, which can and will be subpoenaed from the bank. One of the last cases I prosecuted in the military was a bad check case, and it was quite simple to prove with bank records.

So, the bottom line is, DON'T DO IT!! KNOW how much money is in your account BEFORE you write a check.

Once you have kept track of your spending for an entire month, recording your daily spending will have become a habit, and a good one at that. Staying in control of your spending requires that you know what you are spending and what you are spending it on.

Then, you will be able to sit down as a family, and determine where each family member could reduce expenses. Once that is done, you'll be able to create a family budget. We'll have some more suggestions for that in a later article. So stay tuned.

For special military discounts on a wide variety of goods and services, including travel, insurance, and computers, etc.:

Take advantage of military discounts offered by a number of leading merchants. And when you ask for your military discount, let them know how much you appreciate it!

Here are 111 Easy Ways to slash your expenses and spend less.

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