smart spending

Spending too much? Try the 7-day challenge

The money diet
Mark Carruthers, a CFP in Garnerville, N.Y., also encourages some clients to employ the notebook method to monitor their spending for a short period of time. (If you need to get a handle on your budget before trying the challenge, use our handy work sheet.) He's seen many people set financial goals for retirement or the kids' education only to watch them fall short or even derail because the budget isn't under control.

"It's the variable expenses that are always the problem. It's fairly easy to account for fixed expenses. It's the daily routines that can make up a large percentage of the money that's left unaccounted," says Carruthers.

Gjertsen likens the money challenge to a diet. You can't expect to lose 30 pounds overnight, and you can't expect to resolve years of lax spending habits in a week. But if it makes you think twice about spending $5 on something you really don't need, you're making progress. And, just as with a diet, there are those determined individuals who will make the change permanent and there are those who will slide back into their old habits.

Get ready in three steps
If you'd like to get a handle on your spending habits, all it takes is a small notepad and a bit of determination.

Step 1: Figure out how much cash you need to cover a week's worth of gas, groceries, entertainment, dinner on the town, breakfast at McDonald's, books, music CDs, cosmetics, gifts -- the whole gamut of casual expenses.

Step 2: Be honest. Don't deliberately overestimate so that you're sure to have enough cash to get through the week.

Step 3: Set the anticipated amount aside and don't use debit or credit cards.

If you get through the week with the cash set aside, congratulations! If you need to make a trip to the ATM, it's OK. Review your purchases and see where you could have trimmed costs. This is about developing a mind-set where you seriously consider daily cash expenditures. It can lead to more money in your savings account and long-term financial plans that stay on track.

If you take the challenge, let us know how you did. If you had to replenish your cash, what did you learn about your spending habits? E-mail us at editors@bankrate.com.

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