We all have missing money. You get to the end of your week and you know you had enough money to pay for everything you needed, but somehow you are coming up short. Where is your missing money?
Look, I have been talking, writing and lecturing about personal finance for years now and it still happens to me. I know exactly how much extra money I have in my various accounts. I know that we deposit extra into our main bank account to ensure we don’t overdraft. I know we have extra paychecks a few times a year so I know there is technically extra in the account we pay our bills from. So, I spend it because I know it is there. That is where my missing money is; living it up outside of my budget.
My guess is you have a few dollars floating around outside your budget. We all do. This problem arises when you allow money to sit idly in an account somewhere doing nothing. It will run away from you when you aren’t paying attention. Money wants to be spent, or used in some way and it will find a way to get what it wants. What can you do to keep your hard earned dollars from becoming missing money? I am glad you asked.
The secret to keep your money from going missing is to give it something to do. You money, like most of us, wants to feel like it has a purpose. You need a plan for all of your money, give it something to do. It doesn’t matter if it is paying off debt, paying for your bills, or being put in a nice quiet interest bearing account or investment to make more money for you.
Alright, the metaphor has gone far enough. I recommend you automate everything with your bank to make sure all of your money is going somewhere and doing something. Here are a few ideas.
Following these types of ideas will keep you from asking “Where did my money go?” It just won’t be available to spend.
What other ideas do you have? Tell us in the comments.
My wife and I often get asked how we manage our budget on a practical level. It is all well and good to have a piece of paper somewhere telling you how much money you are supposed to spend each month, but it is much more difficult to actually manage to that budget. There are many ways this can be done. Mint.com‘s budget system will track all of your spending categories and can even alert you when you go over budget. Some people do this manually with a spreadsheet or by keeping all of their receipts. We use an envelope budget. We pull cash each paycheck and put that money into envelopes.
These envelopes correspond to various categories of our spending and when the envelope is empty we are out of money for that particular category. If there is no money in the “Eating out” envelope we eat at home. Or at least we should, we aren’t perfect. Using this method makes all the money spent more tangible, you think more about each decision to spend. It also helps us to ensure we don’t go over our budgets because in theory we shouldn’t be using our debit card, where spending is much easier to lose track of .
These are from the Google play store. Sorry I don’t use iOS but there must be some out there?
How do you manage to your budget? Are there any good apps you can recommend? Tell us in the comments below.
Great so now you have a budget written down and you are all ready to have your spending under control. How can you improve your budget? Pay attention to it for starters. The biggest mistake people make is to ignore the budget they have just put together. It is easy to assume that everything will take care of itself now that your monster spread sheet is put together or that you have set everything up on mint.com. But, alas, it simply isn’t that easy.
I will let you in on something, even if you used my budget template as I suggested, you forgot something on your budget. There is a bill that will come due that wasn’t part of your initial tracking period. That is OK. You will just need to adjust your budget now. Is it ok to change your budget? If it is intentional, absolutely. The problem arise when you simply overspend, without planning. You will need to adjust your budget several time until you have it to a good place and then you will, hopefully, get a raise or something else will change in your financial life that will require you to change or even rewrite your budget.
Understanding that your budget is a living document will help you not stress out when things come up that you require you to make adjustments.
What else can you do to improve your budget?
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