## Recession Proof Household – Part One

### Analyzing your budget is an absolute ‘must’

if you are to gain control of your spending and your savings. Once you go through this exercise I think you will be very surprised at the results.  I know we were!

You can do your expense analysis on paper or computer. We happened to do ours on a big white board, so we could see it hanging on the wall, staring us both right in the face every day. When we were done, we were able to both stand back and analyze our numbers.

Everyone pretty much knows exactly how much money they take home and a general idea about how much they spend.  Well, if you are like most hard working people, you may be wondering why you are not saving more, or saving any money at all. Maybe there often seems to be some abnormal expenditure that accounts for not being able to save, ranging from a car repair, paying for your vacation, to property taxes, annual insurance payments, holiday gifts, etc. You probably are buying too many things that you don’t really need.

This is what you need to do

No matter which method you choose to use to track your expenses (paper, computer or white board), it’s all the same.

1. First write down and total the amount of take-home household income that you take in every month.  You may look at that figure and say “Wow, we take home that much, yet we can’t seem to save much.  What’s the problem?”  The following analysis should help you pinpoint the problem exactly.
2. Next, take your bank statement from the previous month showing that month’s worth of expenses.  From the total amount of your monthly take-home income, one by one, start subtracting every little thing that you spent your money on, From your mortgage or rent, utilities, gas for the car, ATM cash withdrawals, groceries, lunches at work, down to the milk you picked up at the convenience store, everything. Where did it all go?

When we first did this exercise, it was very revealing because it showed us that a lot of the money we should have been saving was getting used up in numerous small purchases throughout the month.  It was being consumed on trips to run out and get this or that, the coffee shop, buying a magazine, lunches at work, \$20 dollars here, \$30 dollars there, ATM withdrawals (analyze these too!),  etc.  We were bleeding, slowly, and in small amounts, but we were bleeding.  It added up to a much higher number than we expected. We had to stop the hemorrhaging.