Mike Causey

Backdoor Budgeting

How\'s your family or personal budget? Senior Correspondent Mike Causey has some tips.

Federal News Network Staff

July 7, 2008 4:00 am

5 min read

Here’s hoping you do a better job with your personal or family budget than Congress does with national finances. If not, you could soon be deeply in debit. And it’s illegal for you to print money, so there goes that idea.

But here comes the cavalry, in the form of Rebecca Schreiber. She’s a DC area financial planner who specializes in younger clients. But she likes older folks too. We asked her to provide us a guest column on how to budget.

She did, and it’s a good one. MC

With rising gas, food and travel prices what’s a Fed to do? Step increases just aren’t cutting it and your pay is slipping through your fingers. You could do what they all say – trudge through your debit and credit card statements, create a spreadsheet and analyze your spending – or you can fake it.

Don’t get me wrong. Most of us know exactly where our money is going, we just feel powerless to stop it. So if you’re losing your battle with spending here are a few ways to get a grip on your cash.

Hide it. Not in shoe boxes, old yearbooks or the glove compartment of your car. Hide some of your paycheck on a regular basis in an account somewhere that’s tough to get to. Set up an automatic transfer from your regular checking account to a money market account at a bank that’s out of your way. Set up the automatic transfer for the day after your paycheck hits and it’s gone before you can say “happy hour.” Or better yet, if your paycheck won’t survive 24 hours in your checking account, go to your HR office and have the savings portion directly deposited into a separate account. If you can’t see it you can’t spend it.
Here’s a solution for the diehard workaholics out there. Between the 14-hour workdays and hour-long commutes you barely have time to buy lunch let alone spend your loot, leaving you to binge shop on the weekends. Next Saturday morning before the first latte hits your bloodstream, go to the nearest ATM and take out the amount of cash you expect to spend that weekend. If the ATM won’t give you that much money all at once, take it as a sign. Go about your weekend and see how fast you run out of money. Come Sunday night flip through your receipts to help you answer that haunting question, “Where did all my money go?”
Here’s another target – set mental spending limits per store. For example, there’s the lunch place you eat at to impress the person you’re meeting and then there’s the place you grab a sandwich. Stick to the sandwich place until you have a reason to spend more like a quasi-job interview or a hot date. Another example is Target. We are a society powerless against the mighty force that is Target. Walking into a store with a set dollar limit will keep you from cramming your apartment with stuff that will just end up on Craigslist.

So let’s say you’ve tried a few tricks, saved a few hundred dollars and are looking to step up your game. Go find the last three months of credit and debit card statements (six months if you’re a real glutton for punishment). Use whatever budgeting tool helps ease the pain – a pen and paper, Excel or Quicken. One of them will do the trick. Here are a few tips to help you survive:

Start with tracking the expenses that can save you taxes. Track what you regularly pay for doctor’s visits, prescriptions, etc. co-pays and any regular medical treatments (spa treatments don’t count). Count them up and figure out what you spend for the year. Congratulations – this is the amount you can set aside in your medical Flexible Spending Account (FSA) at work at your next open benefits season. Most people lose out on this benefit because they don’t know what they spend every year but now you are ahead of the game.
Start with Budgeting Lite. While there may be a laundry list of things you spend money on every month, there are only a few categories you actually have control over. Expenses like internet access, gym memberships and health insurance are set by other people. The parts of your budget where you have the most control is in the Variable section – entertainment, eating out, travel and impulse buys. Go back three to six months including holidays and vacations to figure out what you spend on average each month. These are the expenses that make your lifestyle enjoyable. Focus on the spending that makes a big impact and avoid the things you buy because you’re bored or hungry.

Follow just a few of these steps and you’ll be racking up savings in no time. Whether you’ve been saving for a vacation, house or a little emergency cash you will bring some control back into your life. Having your own cash means not having to ask permission to buy the things you want or need. It means being able to negotiate better deals for cars, houses and electronics. Cash is king. Build your empire. RS

To reach her, click here: rebecca@solidgroundfp.com

Nearly Useless Factoid

According to DiscoveryHealth, more beachgoers are killed in a typical year by falling vending machines (13) than by sharks (10). Sure, but when was the last time you paid a shark for a soda or a bag of chips and didn’t get one?

To reach me: mcausey@federalnewsradio.com