I volunteered part time at an Outreach Center. Being there had made me realize the importance of keeping track of spending habits and earning habits. (See my bonus tip at the end!)

Here in the West, we’re taught to spend what we earn on things we want, but we often overlook the powerful impact of marketing campaigns. We forget that companies use emotional and visual tactics to tempt us into buying things we don’t truly need.

We forget that marketing campaigns are a very strong tool used by companies wanting to make a profit. They use emotional and visual techniques designed to lure each one of us in to buying what we don’t actually need.

I’ve had to quickly learn to adjust to a much lower income in retirement. My higher income led to bad spending habits, as I used to spend on anything I wanted just because I had money in the bank.

A habit that I had decades ago that caused me to go bankrupt very quickly after my husband died. I didn’t want to go there again when my employment came to an end. So I had to do something about it.

It took the last several years of work to realize that I hadn’t set aside much for the future. That habit started to make me far more aware of what needed versus what I wanted.

The adjustment caused me to rethink what I am spending on, what I need, and how I must change my habits in order to accommodate the lower threshold.

Tracking expenses…

It’s not a fun process, and rarely done in the West.

(Cue dramatic music…)

The lowly budget.

It has become synonymous with something akin to eating liver. Not very many people want to do it because the discipline it takes to follow it feels restricting.

But when a goal of stretching every dollar is in place, the idea of spending on needs before wants becomes easier. Just like our possessions, every dollar has to have a home. It they don’t, they disappear like magic.

So how do you get a realistic, workable budget in place?

The primary way to handle money is through a discovery process. You first have to know what you are spending before you can set a process in place.

The West is unaware of how much money leaves their wallet, but it is a common practice in Japan and other countries around the world.

And that means, keeping track of all expenses. The West is unaware of how much money leaves their wallet, but it is a common practice in Japan and other countries around the world.

Tracking expenses can be annoying and often gets postponed initially. It only becomes a priority when the realization dawns that the current spending habit isn’t sustainable.

Something that can be used comes from an idea in Japan. It is called the Kakeibo, a budget tool designed long ago for Japanese housewives to manage their household money.

Entering in the information…

All income is entered into the journal, as well as a list of recurring expenses. Then a goal for savings is entered.

…you need to track every purchase.

But for other expenses, you need to track every purchase. You can use a small notebook in your purse or wallet to record each purchase, and then tally up the spending by category weekly or monthly.

In a month or three, you can calculate the total amount spent in each category. Divide this number by the number of weeks you shopped to find your weekly totals.

Determine how realistic your goals are…

Compare the total expenses with your income.

• Are you spending more than you earn?
• Are you spending on things you want, or things you need?

Once you see what your income versus outgo is, write down that revelation in your Kakeibo.

Once you see what your income versus outgo is, write down that revelation in your Kakeibo.

Compare your income and spending to what you want to save.

• Is the savings goal realistic?
• Or do you need to adjust something somewhere to make that savings goal happen?

Then write out a budget…

Once all that is in place, you can set yourself on a budget.

In the words of John Maxwell,

“A budget is telling your money where to go, instead of wondering where it went.”

Here is an easy way to start a budget that might help put it all together for you. Or work on starting our your budget on a smaller scale to test the waters.

As you get used to managing your spending, you can adjust the budget to fit your needs.

And if that form doesn’t work for you, here are more so you can personalize your experience.

Fun money, anyone?

Just don’t forget to keep a tiny bit aside for blow money!

Tiny.

(Did I say TINY? Like about 1-4% of your income….)

There are plenty of inexpensive items that can fill that dopamine rush desired by having something new. Such as shopping at thrifty stores, like Dollar Tree, Dollar Store, and Goodwill stores can provide fun items that will suit that desire.

Or Temu. Temu is a great place to shop if you don’t have a lot of money. (Yes, yes. It’s a Chinese company – but those same shops also sell on Amazon and in retail stores at a much higher price. Why not just cut out the middle man?)

Personal struggles with spending on treats…

Years ago when my income was low, I learned a trick. If I didn’t allow for a little treat, then I’d blow everything I had. The frustration of not having something that wasn’t on my “necessities” list was too strong.

Years ago when my income was low, I learned a trick…

So I compromised on buying a drink at the gas station once in a while when they cost 25¢. Now I find something at a thrifty store or Temu – and, even then, only if I’m so inclined to spend more just because I need that little dopamine rush.

Then make it a habit…

Sticking to it as closely as you can will show you that even $1 saved will add up in the long run.

But don’t spend that savings! That is for emergencies and your future. If your income falters, you will have a little bit of something to fall back on.

In a nutshell, it comes down to this:

“Do not save what is left after spending, but spend what is left after saving.” – Warren Buffett

It is the idea to “pay yourself first”.

In the end, you will actually feel freer than you did being chained to the “paycheck-to-paycheck” mindset.

If you income is really small…

Like, you have kids to feed and don’t have enough income to pay for necessities like rent, food and clothes, then reaching out to help centers (like Catholic Charities or other outreach resources in your area) can offset the load quite a bit.

Then you can budget the remaining expenses using a budgeting system as shown above.

And you can save money. It may not seem like much at times, but every penny saved toward future expenses is a step closer to financial stability.

AND NOW THE BONUS TIP…

If you’re struggling with finances, use CASH and an Envelope system.

Label each envelope with the normal necessities you buy, like groceries, gas, and personal needs. Then use the cash from each envelope for only those purposes. When the envelope is empty, that’s all you have left for that category for spending.

Seeing the money disappear from each envelope gives you a visual and psychological sense of just how fast your money is disappearing…

Don’t pull from one to pay for something in another if you can help it! Seeing the money disappear from each envelope gives you a visual and psychological sense of just how fast your money is disappearing in each category.

If you find that one category is disappearing faster than another, then adjust your budget to accommodate that difference. Review weekly or monthly and you’ll be able to get a better handle on what is required within your expenses.

Then you can move on…

Once you’ve mastered (and that often takes a very long time – 6 months to a year or more) to managing your categories well, some “experts” say you can move into a digital method if you want to do so.

But be forewarned:

If you don’t mark down everything spent in each category every single time, you’ll easily slip back into the spending-without-thinking mindset that digital methods tend to cause!

Because you don’t see the money leaving your envelope, it’s easy to slip back into spending what you don’t have by forgetting to write down everything that was spent from every envelope – especially if you’ve mixed miscellaneous purchases with groceries. (For example, at “WalMart,” it’s fair game to mess with your division of money on the same receipt.)

In the end, it’s far easier to manage money when it is in a physical form than digital. You can do both, but only after you overcome bad spending habits.

And don’t be swayed by your broke neighbors!

Surround yourself with people who have succeeded in overcoming debt and consumerism. You reflect those you put in your inner circle of influences.

If you don’t have anyone close to you who isn’t broke, then find people online.

Like Warren Buffett.

You will find out just how well you can handle your finances instead of letting your desires rule you. And the fear of not having enough won’t be as difficult to handle as you navigate through financial successes.

When all is said and done, then maybe you can teach your broke friends and relatives how to do it, too.

And one more little bonus tip…

When you’re already broke, doing what you are doing won’t get you out of being broke.

“The most important thing to do if you find yourself in a hole is to stop digging.” – Warren Buffet

Do you have ideas that worked for you? Or questions that others might be able to help you with?

Be sure to share your comments in the comments section below. I look forward to your input!