Where Does Your Income Go?
Some of us spend our income on lots of unnecessary things! Sometimes, we don’t even realize where we spend it all. We only know that our income disappears rather quickly. That is where a budget comes in.
For me, I have always assumed that that ridiculous amount of bills causes my income to disappear. That is true for the most part, but where am I spending too much? Where are you spending too much?
I have frequently written about budgets, and the need to have one. One of the first steps to create a workable budget is figuring out where your money is going.
My Income Spending Breakdown
So, from March 15th through April 15th I kept all receipts and did a breakdown of my spending. Some of the areas were absolutely eye-opening!
Here is the list (most items I will not be giving dollar amounts, only percentage of income):
- Mortgage: 25 percent of income.
- Vehicle payment/fuel/insurance: 10 percent.
- Credit Card payments: 20 percent of income!!!! I pay 412 dollars per month in credit card interest!!!
- Groceries/Person Hygiene/Wife’s Pet Menagerie: 21 percent of income!! I could not believe when I did the math, and we spend over 1000 dollars per month on this! There are only two of us not counting the animals!
- Fast Food: We did pretty good here and only spent 73 dollars. However, I would love to get that down to zero, but every now and again I enjoy some Taco Bell or Popeyes among others. We used to spend a significant amount more, but I started taking food to work.
- Meanwhile, I sill spent 185 dollars at work on junk food and those great energy drinks! I need to cut this back dramatically!
- Cigarettes: Oh my! I will not put the amount I spend on these on here because my wife reads these! Just know, it is a good amount of money, and I need to quit. What a complete waste of money and most importantly, the impact on my health!
Things We Previously Eliminated From Our Income Spending
As you probably noticed, I didn’t list electricity, cell phones or any of the standard bills that we all have for the most part.
Firstly, we cut our cable quite some time ago. We only have internet and stream the television shows that we watch. As a result of this, we do have monthly Netflix and Hulu bills to pay. However, that is hugely less money than our cable bill.
Secondly, well until very recently anyway, I cut the cell phone bill down quite a bit. We were both still using old phones because they were paid off. I had mine since early 2015. The wife has had hers since early 2017 so a bit newer. However, just the other day I could not take it anymore. I upgraded my phone finally cause my old one just got to be too much for my patience.
Plan For Our Income and Budget Going Forward
There are several areas we will work hard to improve on our spending.
We need to cut our grocery bill substantially! This might be difficult to do because my wife likes to buy groceries and make food for a household of 19 people for just the two of us! I will take credit for some food waste as I take two meals to work every day and sometimes only eat one. I am a bit picky on leftovers so I won’t eat them two days later!
Most importantly, I need to quit smoking! That is going to become a priority for me very soon! I have tried many times over the years, but it won’t ever happen if I don’t keep trying.
Likewise, I need to quit drinking Monster energy drinks, and I need to stop buying all that junk food!
These three areas are my priorities to cut spending.
What Can You Do To Cut Spending?
I hope that just going over all of our stuff and the moves I am taking for a correction have opened your eyes!
I know from experience that some of these expenses just aren’t accounted for in our day to day lives but to better manage our income we need to know where our income goes. We also need to know this to effectively manage a budget.
One of my problems through the years has been thinking about a day at a time instead of overall for say a month. I used to believe this is only 2.50 dollars a day. That is not very much money. However, if you think about that 2.50 dollars over a month, it adds up to a decent amount of money.
YOUR TURN – Any areas you have cut spending that can help all of us out? What was the breaking point that made you decide to fix your finances? Please let us know in the comments!
P.S. Do NOT forget to start saving an emergency fund now! If you have trouble saving money I recommend Digit.