Paper or Plastic?
Paper or Plastic?
In a previous generation, this used to be a question at your local grocery store, referring to what type of bag you wanted your groceries in. More commonly, today, it refers to what type of currency you are using to pay for the groceries! And bags cost extra!
So many of us use plastic cards today for all of our purchases! Do you ever have trouble keeping up with and recording the receipts? I do! Was it credit or debit? Can I find the date on the receipt? Can I find the dollar amount on the receipt? Have I recorded that receipt, especially the credit charges, so that, when that credit card statement arrives, and it will sooner than I want it to, I will not be surprised at what I am responsible for!
Several years ago, charging items and the looming credit card statement was a problem for our family.
It started when it seemed there was more month than money and we were not following a budget.
Then we created a budget with the money we knew was our income. This budget included setting aside a certain dollar amount for Saving each month. That seemed simple enough. But we needed to be more specific.
- First, we created a form we called a Charge Log. We recorded every dollar amount we used a credit card for during the month. This gave us a clearer picture of what the end-of-month statement should look like (no surprises).
- Second, we added what many of you will say was a bit of complexity! We made a notebook with notebook sized pages that duplicated a Savings Register (our ‘White Notebook’). This is our Savings Account in a notebook.
- Next, we divided this Savings Account into Sub-Accounts, relevant to our life stage. At the time we first started this, it included College Funds, Medical, Insurance, Auto, Mortgage Surplus, Vacation, and FFA (financial freedom account), and Credit Card. Each month, the money designated for Saving from our Budget was divided into these sub-accounts. Not necessarily equal amounts in each, but typically the same dollar amount each month.
- When we charged an item, after recording it on the Charge Log, we then did what we called an “Internal Transfer” from whichever sub-account the charge related to into the Credit Card sub-account. Guess what happened when the Credit Card Statement arrived? We had the money in that Credit Card sub-account to pay for all of the items on the Statement we had charged!
Want a copy of our Charge Log? Click here.
“If you measure something, you can understand it. If you understand it, you can control it, and if you can control it, you can improve it.” The same holds true in your monthly budgeting.
The reality is that it is nearly impossible to complete & follow a monthly budget without improving your overall financial position. There are several reasons for this, so I would challenge you to do this.
First, just developing a budget for yourself will raise your awareness of what you have for revenue or income sources and then also boost your cognizance of how much you are spending each month. Next, you will come to grips with the reality of one of three facts. Either you need to boost your income sources, reduce your outgoing expenditures or, thank goodness, if you have more income than expenses, you can then save some money. Of course, this is fantastic! You just need to determine where you will store or invest those extra funds each month…
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