Wednesday, January 23, 2013

Thrifty People Track Their Spending

Not everyone likes tracking spending. Some people think that it takes too much time. Others consider it’s annoying or doesn’t really help. In reality, all these are simply flimsy pretences been called to excuse human laziness. Thrifty people think so.

This nonsense is alien to thrifty people. They have some inborn inclination to those things ignored by others.

Many of the thrifty people track their spending by the following simple way.

First of all they consider that often the everyday little things cost us more than big things in the total. Just the little things are considered to be the main sourse of home savings. This strategy may seem small-minded. But the only one fact excuses it – it gives a result. A good result or an excellent one is depending on how closely a person follows the strategy.

They keep the following rule: match your budget with your bank statement. What does it give them?  They never find themselves in any unpleasant position concerned to lack of money.

Also, they do spending diaries. They make a note of everything they spend. They record bills, groceries, medical expenses, bus tickets, magazines, clothes, entertainment, and so on, everything they spend.

Then they sort records and notes by expense categories. The simplest division includes the following four categories:
  1. Income
  2. Needs
  3. Wants
  4. Investments and savings
“Income” is any money a person receives from anywhere, through one source or another.
“Needs” are any payments for basic necessities, indispensable things, such as food, water, clothing, and shelter, which a person requires to survive.
“Wants” is any money they spend extra their needs. This category may include several kinds of entertainment, knick-knackery, things for enjoy.

Then they create spreadsheets and enter collected data into the appropriate columns. This helps them see where their money is going and how they could make changes. 

A tracking period is usually a month. Then they can set some simple budget for the next month on the base of the previous period of time. They repeat this process each month.

Tracking spending helps thrifty people to make more clever decisions for making their life more intelligent and ordered.