by Ethel Smith

Created on: May 23, 2007   Last Updated: January 07, 2008

Everyone needs to budget and attempt to live within their means, unless they are millionaires. Even then I guess it is important to know what you are spending as, unless you keep a track of your spending you will no doubt end up on a downward spiral of debt. The more you overspend, the higher the risk will be of having to pay high interest charges back for the privilege of borrowing.

So it is fundamentally important to know exactly what you are spending. This means knowing the total price of something, including any credit charges, not just the deposit or purchase price. For example, you may buy something that is supposedly interest free but if you read the small print you may have to pay extra for other things. By doing so you may end up paying far more than is really necessary or affordable.

When you shop keep receipts and try to balance your books. I always kept a basic paper accounts book, years ago. Even though our income was only small, this means of keeping a record ensured that we knew what we were spending and, in many ways, prevented us getting into debt. After all there really is no denying what is plain for all to see in black and white.

More recently I have kept such details on appropriate software on my computer. This actually enables me to balance my weekly, daily or monthly spending as I want or need to, plus if you have no idea what you are spending you will never notice if someone commits fraud on your bank account or credit card.

So basically it is important to know what you are spending to:-

Discover fraud and theft as soon as possible.

Know if you are living within your means.

Get the best value for your money.

Prevent buying useless articles and then not being able to afford to buy essential items.

Manage your budget well and have enough spare cash to save.

Not waste money.

When you consider how hard most of us have to work for a living it is silly to fritter money away. In many ways we give up our lives for work. We only have a few free hours a day as work takes up a big chunk of our lives. If you have no idea what you are spending and just spend as and when you want you will invariably waste money, end up short of cash and buy overpriced and useless objects. Think when you are spending and keep a track of where your cash goes. When you are thinking and remembering your purchases, nine times out of ten, you will spend and waste much less money. It may also help you to get a grip on your finances and eventually get more value for your hard earned cash.

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