3557: [Part 2] How to Complete Your Very First Spending Audit by Amanda Brownlow on Personal Finance Basics

[00:00:00] Dell PCs with Intel inside are built for the moments that matter. For the moments you plan and the ones you don't. Built for the busy days that turn into all night study sessions. The moment you're working from a cafe and realize every outlet's taken. The times you're deep in your flow and the absolute last thing you need is an auto update throwing off your momentum. That's why Dell builds tech that adapts to the way you actually work. Built with long lasting batteries so you're not scrambling for the time.

[00:00:30] the closest outlet. And built in intelligence that makes updates around your schedule not in the middle of it. They don't build tech for tech sake. They build it for you. Find technology built for the way you work at Dell.com slash Dell PCs. Built for you.

[00:00:52] This is Optimal Finance Daily. How to Complete Your Very First Spending Audit. Part 2 by Amanda Brownlow of HelloBrownlow.com.

[00:01:01] Number 5. Review Your Everyday Spending. Now for the fun part. Joking. Get a clean sheet of paper or a new page in your spreadsheet. Make several categories at the top. Groceries, eating out, shopping, gas and home. Now read through each and every transaction and put it into the categories you made. If you need to expand categories or make new ones, that's totally cool. You need to know exactly what you spend money on.

[00:01:29] When you're doing this spending audit. When you're doing this spending audit, it may be helpful to write down the store name or what the item was next to the amount. It isn't necessary, but it can help you see what stores you spend the most money at. Number 5.5. Cash Only Exceptions. We use the cash envelope system for a long while. The key is that you, one, had a set and limited amount of money in a category each month, and two, you kept track of transactions on a ledger.

[00:01:58] If you are without a budget, you may not know how much cash you're spending. Check your bank statements for ATM withdrawals, teller withdrawals, and check deposits where you may have received cash back. Most banks have a deposit slip available for viewing in online banking. If you don't have a bank account, which you need to set up one ASAP, review your paychecks. Do you have any of that money left in your wallet?

[00:02:24] Another way to get cash is at any store when you use your debit card with your PIN number. If you have receipts, total up the cash back you received during those visits. Search your purse, car, and everywhere in between for any cash transaction receipts. You need to have a concrete idea of where your money went. Total up all the transactions just like you did in number 5. If you don't have the receipts and aren't quite sure, do your best to guess as to how much money is left in your wallet.

[00:02:53] You need to be a receipt-saving hero next month. Number 6. Add it all up. Whip out your calculator and total all of your purchases. First, make totals from income, debt, bills, everyday spending, and the amount put into savings accounts or retirement. Second, total everything together, income minus expenses. What does that number come out to be? Are you spending more than you're earning?

[00:03:22] Number 7. Set goals. Take a long, hard look at those totals. Are you happy with what you see? Unimpressed? Angry? Sad? It's okay to feel a range of emotions when looking at the cold, hard numbers. But don't fight about it. Push through it. Don't think for a second about giving up. You've come so far already. Let's set goals to make you happier the next time you look at your monthly budget. First, what is your primary problem area?

[00:03:51] Are you spending more than you make? Are your debt payments too high? Is eating out and grocery shopping out of control? Did shopping become an everyday thing? Are you saving any money? Emergency fund, house down payment, retirement, etc. Set goals around your problem area and fix it first. Say your debt payments are just too dang much for you to handle. What are those debts? Can you take any immediate action in the next week to reduce them?

[00:04:20] Maybe it's a crushing payment on your car. Could you trade it in for something you can comfortably afford? Can you work to pay your debts down in the debt snowball fashion? We recommend Dave Ramsey's Total Money Makeover and Complete Guide to Money. Even if you think you don't need any further reading, I really, really think you should give these books a read. Dave gives tackling debt and savings a whole new look. Set a goal to pay off debt and make it actionable.

[00:04:47] I will pay off my $10,000 of debt in one year by reducing spending in the following areas and putting those savings towards the outstanding debt balance every month. Another example. I'm spending way more than I make and I'm in debt. I'll curb my shopping habits, in whatever areas, to not go into debt anymore. My goal is to have my $5,000 debt paid in full by November, which is an extra $500 each month paid towards my debt. You get the idea.

[00:05:15] Set a goal, amount, what actions you'll take to get there, and a deadline. But remember, don't beat yourself up if you just miss the mark on your deadline or overall goal. You can still achieve it. Number eight, make cuts. Whatever your goal is, put money into savings, pay off debt, etc. You'll probably need to make cuts of some sort. Be super honest with yourself. Are any of your spending categories cutting into your goals?

[00:05:42] For my husband and me, it was needless shopping and eating out. I'm a frugal person who loves a bargain, but hot dang, I was still spending a ton of money. And eating out? I was a new mom who didn't have the brainpower for cooking. That's how I thought of it. But when we reduced those areas of our budget or eliminated them completely, we saved close to $400. Crazy. And that's just a fraction of what we used to spend before we made a budget. Number nine, make a budget for next month.

[00:06:12] Based on your numbers from the spending audit minus any realistic cuts you can make, create a budget. Set a basic budget for your first month. If you realize you need a more specific category than kids, maybe it should be daycare, after-school activities, swim lessons, etc. Get granular. Don't be afraid to adjust as you need to. It's all about seeing where your money goes and keeping track of it. It's also a great practice to add and align for yearly, bimonthly, or other occasional bills,

[00:06:42] like property taxes, insurance, etc. And number ten, stick with it. Practice makes perfect. Simone Biles didn't become amazing in one month. You won't become an amazing superstar budgeter in one month. And that's okay. I wasn't either, and my budget still gets a tweak here and there. It's life. Don't be scared of adjustments you need to make in your budget. Maybe you weren't realistic about setting a low-grocery budget this month, and way overspent.

[00:07:12] Talk about it with your partner and find support in them. Adjust your budget and do better next month. Month after month of sticking to a budget, you'll see that your goals are achievable. You're saving more money than you had previously. You find that you're relaxed when you think about money. Not stressed out. You just listened to part two of the post titled How to Complete Your First Yearly Spending Audit by Amanda Brownlow of HelloBrownlow.com

[00:07:42] Summer's almost here, and honestly, I want to be planning a vacation, not stressing about whether I can actually afford it. That's why I keep my finances organized with Monarch, so I can enjoy my summer knowing my money's taken care of. Monarch is the personal finance app that tracks everything. Accounts, investments, savings, goals, and spending. Get your first year of Monarch for half off, just $50, with promo code OPTIMAL.

[00:08:11] What I love is that Monarch monitors your money so you don't have to. Their AI recap can even catch a spending spike before it becomes a problem. It's like having a financial advisor in your pocket. I can ask the AI assistant, can I afford this vacation without touching savings? And get a real answer. Use code OPTIMAL at Monarch.com to get your first year half off at just $50.

[00:08:37] That's 50% off your first year at Monarch.com with code OPTIMAL. Dell PCs with Intel inside are built for the moments that matter. For the moments you plan and the ones you don't. Built for the busy days that turn into all-night study sessions. The moment you're working from a cafe and realize every outlet's taken. The times you're deep in your flow and the absolute last thing you need is an auto-update throwing off your momentum.

[00:09:06] That's why Dell builds tech that adapts to the way you actually work. Built with long-lasting batteries so you're not scrambling for the closest outlet. And built-in intelligence that makes updates around your schedule, not in the middle of it. They don't build tech for tech's sake. They build it for you. Find technology built for the way you work at Dell.com slash Dell PCs. Built for you.

[00:09:35] Remember, a budget is just the simple act of telling your money where to go versus wondering where it went. It's an exercise in awareness over your money. That contributes to the mindful management of your hard-earned dollars. I think it's pretty difficult to improve your finances until you have a crystal clear picture of what's going on now. And that's where the tracking of your spending comes in. Then you play with some assumptions on where adjustments can be made. Test those assumptions. And reassess.

[00:10:03] A budget allows you to do this. But it only really helps you if you continually engage with it. This means once or twice a month, you're assessing your actual spending against what you've budgeted. Or you can use apps like You Need a Budget, where you can do this in real time as you're spending money. By continually engaging with your budget, you'll be able to see where you need to make adjustments or where you were being unrealistic about desired spending versus actual spending.

[00:10:31] For me, the simple act of tracking my spending during each transaction made me much more thoughtful during the key inflection point when I was about to swipe my credit card. I got myself into debt over mindless spending. So if you're like me, try bringing some awareness into the equation and see how it affects your purchasing behaviors. But that's going to do it for today. Thanks so much for tuning in and listening to both parts of this post. And I'll see you tomorrow for more Optimal Finance Daily,

[00:11:00] where your optimal life awaits.