Before becoming a personal finance writer and writing her book that is due next year, Holly Johnson used to spend over $1,000 on food per month. She decided to sit down with her husband, Greg, and start tracking their monthly expenditure to see where their leaks were. The Johnsons, like many Americans, did not know just how much money they were spending because they were too busy to notice.
Instead, they got into a routine that saw them spend a lot of money on things that they did not really need. Bill Taylor from Northwestern Mutual, holds the belief that any people do not track their monthly expenditure. Very few Americans actually have a working budget system that allows them to save on expenses, reduce their debt, and invest their surplus capital.
How to Cap Monthly Expenditure and Debt
Taylor and the Johnsons agree that it is important to immediately start tracking monthly expenditure. This can be done by writing everything in a notebook or using websites like LeanVest. This allows people to reduce excessive spending.
The next thing is to create a feasible and realistic budget. It is important to make a list of all essentials like food, rent and bills, and another list of things one wants like gym membership. Holly suggests prioritizing the second list based on what adds the most enjoyment to one’s life.
It is also important to stay on track and focus attention on meeting bigger financial goals. Financial discipline is key. However, Taylor discourages people from becoming frugal by treating themselves every once in a while especially after meeting their monthly targets.
The last thing is to stick to the budget.