The Case of the Missing Money

Has this ever happened to you: You put a bit of “walking around” cash in your wallet, say $30 or $40. A short time later you reach for your wallet to make a small purchase only to find that it’s empty. That $20 you slipped in a few days ago is gone. As are the smaller bills you know were in there. You don’t remember buying anything and there’s no receipt in the side pocket to jog your memory. It’s like your money took a detour into the Twilight Zone.

Impulse purchases are the number one budget-buster for a lot of us. Those quarters you pop into a vending machine for a bottle of water are forgotten before you quench your thirst. The pack of gum you bought when you filled up your gas tank? It cost $1.37, but you don’t recall putting down $1.50 and strolling out the door before you got your change. The $5 candy bar you bought from a school fundraiser was a really nice gesture that completely slipped your mind.
 
While the amount of any individual purchase could be negligible, the total amount of money we fritter away without thinking about it can easily average $3 per day. That works out to $90 a month or over $1000 every year. All those packages of gum? They can end up costing a lot more than you think.
 
The good news is you can have it all. And by “all” I mean a working budget, money in the bank, and the occasional little splurge. All you need to do is put on your financial detective hat (a charcoal grey fedora if you have it; otherwise whatever’s in your closet will do), document every small unplanned purchase that you pay cash for, and total up your spending over a week’s time. So if your co-workers ask you to chip in $2 for a birthday cake for the boss, make a note. If you give a neighbor’s kid $10 to rake leaves, write it down. The $5 you paid for a box of Girl Scout Thin Mint Cookies also goes on the list.
 
Keep track of these unexpected spends every week for a month. Calculate your weekly and monthly totals. If you’ve never done this before, the final amount will probably surprise you. But remember, knowledge is power, so once you know your “fritter total” you can:
  • Look at how, when and where you spend money. If you’re frittering away $1.50 on weekday mornings for coffee and donuts, cutting back to just twice a week can save you over $200 a year.
  • Give yourself a reasonable allowance in cash every month for impulse purchases.
  • Re-allocate money you’re spending on spur-of-the-moment purchases to other areas that benefit you more, such as investing.
 
The point of a “fritter finder” investigation is mindfulness, not financial punishment. Taking control of your personal finances from the first penny to the last dollar can decrease stress and put you on a clear path to achieving your financial goals. It won’t cost you a thing, and the payoff will be priceless.
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© 2021 by RINO INVEST

Wealth Building 101

Matt Pettit, CIO

Matt Pettit serves as the Chief Investment Officer of RINO INVEST. He is a 2015 Graduate of Wofford College with a degree in Accounting. He also serves his country as a Captain in the United States Army Reserve.

Favorite quote:
“Money is a terrible master but an excellent servant.”
P.T. Barnum