Honest Budgeting

Old school budgeting requires that we add our monthly expenses with our annualized costs(converted to monthly amounts) and stick within the computed bounds, never to falter. But what about those expenses that don't fall into the usual "rent, car, insurance" categories?

Contemporary budgeting models tell us to not just create spending categories, but to track our spending for at least one month so that we can see where we are actually spending money. I've found that tracking spending for at least three months provides a more comprehensive look. According to Your Money or Your Life, folks who track their spending on a regular basis end up spending 20 percent less overall.


After tracking expenses for one to three months, it's clear where spending categories should exist and where you can cut back. If you have a particular love or vice, make sure to note it. Do you spend $100 each month on wine? On marijuana? Perfume? Porn? Then be honest about it. Being honest about where we spend our money is a key step in gaining better control of how we spend.