2/16/11

Do you know your number? Go Micro.

Recent economic challenges have forced many people to take a closer look at their finances and that, of course, is a good thing.  The practical matters of spending less than you earn, saving, and budgeting have become familiar practices for more people than ever before.  I hope it sticks (we can be a fickle bunch, can't we?) but that's another topic for another day.
Once you really dig into your finances, it's easy to get overwhelmed.  Since I've been home and really digging into our own situation, I quickly realized that there are many different ways to peel this onion and I found it fairly difficult to assess how we were really doing.  The main question is, "Can we sustain our current earning/spending pace and still achieve our goals?"  If not, what has to change?, if so, how can we do better?

Regardless of what the reality of our situation is, the goal is to do better than we are doing right now.  Ok, how do we get started, there is so much to think about and it can take a lot of time to assess, research, then take action.  Where to begin???

The longest journey starts with a small step, right?  One of the first things I did was to give myself an idea of how much money we had to spend per day.  It just felt more manageable, like I had more control...  Take all the fixed costs out (mortgage, rent, avg. utilities, forced savings, etc.) and subtract that from the dollars coming in after taxes.  Then divide that by the number of days in the month and there's a real number I can keep in my head as we spend money throughout the month.  When you keep track of every dollar you spend each day you can see how you're doing against that number.  Instant feedback.  It's not the most important number in your personal finance arsenal but I find it to be a good guideline that sticks with me and has helped me to make some good decisions along the way.

Yes, I'm micro-managing our home finances.  It wasn't my style when I was managing people but the money can't make good decisions for itself and it doesn't give me any feedback.  Therefore, we need to be involved in every action and every decision.
My number is $63.  
Do you know your number? 


8 comments:

Our Mom Spot said...

It's important to identify the small ways we waste $ every day.

Example: If you purchase lunch every day @ work, you could spend between $50-$75 each week...which is over $200 per month!

Pack your lunch at least twice a week & save.

Small things add up : )

Uhura! said...

These are good points to consider. I am sure I can come up with a few ways to cut back on wasting money.

Daily Saving said...

Thanks for stopping by! Yeah, lots of ways to save but it is really important to know what you're dealing with regarding your income and outflow... do you know your number?

Our Mom Spot said...

@ Work (for lunch) My number is $9.33

Household # is $133.33

: )

Daily Saving said...

Our Mom Spot has the # and more readily at hand. Great!! Now the trick is to manage it effectively, right? That's another challenge for another day. Ha! Thanks, Brian

Daria @ Mom in Management said...

OOh, good question! I will have to take a look at the budget and figure this # out. Thanks Brian!

Hungrigyrl said...

Interesting way to look it. On top of budgeting monthly it almost seems easier to keep yourself in check by managing your daily spending. I'm going to figure out my number! Good post!

Henrietta Gibbs said...

Certainly. Best part about going micro is it helps you keep a real tab on the minutest details of your daily activities, which is where the wayward spending tend to kick in, and deplete your finances bit by bit. People tend to miss how much is lost due to mindless purchase, which tend to be a small and frivolous purchase, until they accrue. That's why a yard sale would be smart, for example, because it helps you reduce the bulk and weight of property, while regaining the value of such assets, to keep you adjustable and adept. Nothing is wasted. It's these little fine adjustments that can help one reach a better fiscal plane.

Henrietta @ MediQ