Where does your money go?
June 3, 2008
In this article from the Wall Street Journal by Douglas Sease, he suggests yet another pen and paper method of tracking your expenses to help increase spending awareness and save more effectively: the 3×5 method.
He and his wife came to the realization that they needed to figure out where their money was going when
“we were shocked and surprised that the profits from a house sale had simply disappeared a year later. I had counted on those profits to form the core of a savings program that would allow us, over the years, to buy a boat and save enough to retire early and go sailing.
We both resolved — that’s important because this plan won’t work if everyone isn’t playing the game — to figure out where in the world the money was going. The weekly 3×5 cards were the vehicle to do it. Much was revealed in the first month alone. Restaurants were a primary villain. We had moved to New York from Detroit and were reveling in the variety and quality of dining opportunities suddenly available. And going broke as a result. The bad part was that most of the meals hadn’t been worth what they cost. Good, yes. Memorable, no. We resolved to indulge our own penchant for cooking more often.”
He notes that the “secrets” to their success were:
1. Having a real-time account of their expenses. It was crucial to know where their money was going.
2. Developing buyer’s remorse in advance of buying.
Of the entire article, I’d say that this is one of the most important principles of finance: learning to ask yourself, “Do I really need this?”
Missed this article, thanks for posting!
After years of eating out, I am finally learning to cook. I eat healthier, spend *much* less money, and feel better about knowing what goes into my meals.
Seems obvious, but it can be hard to cook for 1 (or 2).
~dollar incense~ Welcome!
I like making small meals or snacks for 1, but not so much real meals.