Spending too much? Try the 7-day challenge
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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. | 
