How many times have you received your paycheck on one day, and 3 days later wondered where did all of your money go?  Or you may be one of those people who live by a budget, but for some reason as you’re sticking to that budget you realize that there are some things that you keep missing to add to your monthly budget?  The reason for so many of our budgetary mishaps is actually a simple one: we often forget to think about the bills that come about only every so often - things like insurance, taxes, annual credit card fees, annual gym fees, etc.   In addition, we forget to account for those minor expenditures that we take for granted, like vending machine purchases, fast food and other small cash purchases.

When you’re making your budget, be sure to consider bills that only occur annually or just not as often as your cable bill.   Consider things like property taxes, which you may only pay once a year or in some municipalities twice a year.  To avoid having this common expense pop up as the ever present unexpected bill, take the amount of your yearly taxes and divide it by twelve.  Now you know how much your taxes cost you on a monthly basis.  Accounting for these bills that we often forget about will help you in making sure your budget is accurate.

Secondly, purchases that you see as being insignificant often times will break your bank accounts without you even noticing.  The best way to account for unrecognized expenditures is to use a complete expense log.  I personally don’t buy expense logs –instead, I drew up my own using Microsoft Excel.  When you start logging every cent you spend, yes it seems like a lot of work, you notice where you’re overspending.  As you fill out your expense report daily, you’ll also notice that your spending will decrease because the report will be your own source of accountability; however, the key to this working is your honesty about your finances.

Give expense tracking a try for a couple months and see how much more doable your personal budgets will become.  Achieving financial freedom is a journey of honesty, work and patience.  According to Thomas J. Stanley, Ph.D. and William D. Danko, Ph.D. in their book, The Millionaire Next Door: The Surprising Secrets of America’s Wealthy, the truly wealthy of America know where their money is going on a monthly basis.  So if you’re planning on one day being financially free and wealthy, you need to know how much you spend in different areas per month.

Written by: Kwan