It is common to pay lots of attention to unexpected expenses, through whining and commiserating with others. But look at the bright side; isn’t there sometimes, unexpected income? Maybe your perception of the surprise influx is what keeps you from using it effectively and therefore you don’t fully appreciate it, or remember it, for that matter.
In the book, Your Money or Your Life, written by Joe Dominguez and Vicki Robin, the authors recommend that you record every penny you spend every month. This is a commonly prescribed exercise simply because it is so effective in modifying spending habits. As the saying goes, “Observed behavior always changes.” Which is why this is also a proven weight loss tool; having to record that Biggy Size Combo #1 and a deep fried apple pie certainly weighs on your mind as you ponder your lunch options.
Interestingly however, Dominquez and Robin first recommend that you record every single penny that you have ever received in your entire life; earned, borrowed but never paid back, won from your buddies who bet you wouldn’t shave your forearms, been awarded in a settlement, been paid under the table, stolen, collected as rent, received as gifts, gambling payouts, weekend jobs, payment for test answers in college, informal consulting, odd jobs and whatever other way some coins have landed into your pocket.
In doing this exercise several years ago, I totaled estimates of income from birthday and Christmas gifts, babysitting pay, cleaning my father’s office on Saturdays, yard work, spring-cleaning my grandmother’s house (oh, the countless transoms!), substitute teaching during college as well as each of the professional positions I’ve held. What an eye opener!
I encourage you to do this to see just how much money has passed through your hands in your lifetime. Also, keep a current accounting for a few months to see exactly how much money is coming in now. Pay attention to how you view the “surprises.” Have you previously dismissed or misused them simply because they appeared out of the blue?
This exercise taught me that I was more likely to waste money when it had come to me unexpectedly or easily. I was usually smart with a big bonuses but I wasn’t as mindful with gift certificates, refunds, or expense reimbursement checks. When I charted all of these extraneous sources of cash as income, instead of just filing it in my head as “free money,” I became acutely aware of the wasteful spending that my misclassifications had caused.
I learned that it is important to have a plan for any “extra” money received. Deposit it somewhere quickly so it doesn’t slowly vanish through the hole in your wallet out of which unwatched money can easily slip. For example, pay down the principal of any debt, including a mortgage, deposit it into savings or put it towards the retirement account that you haven’t quite maxed out for the year yet.
Regardless of what you do with it, be as mindful of this as money as you are with your paycheck. Because, as they say, it’s not what you earn, it’s what you keep.
Image courtesy of radioflyer007