The Couch-Potato Guide to Budgeting

Motley Fool

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A survey last year by found that 61% of Americans surveyed either don't have or don't stick to their budget.

Slackers? Hardly. Have you ever tried to stick to a budget?

If you have or haven't (hey, no one's judging here), read on for a streamlined cash flow control plan that even couch potatoes like me can follow.

Cash flow crash course Our Couch Potato Budget concentrates on everyday spending. We're leaving out housing, insurance, and the all-important savings categories for now.

Step 1: Get a snapshot of your spending Wondering where all the money goes? If your credit card company tracks your spending, you can ask Mrs. Mastercard and Visa for an annual spending recap. Your annual (or even monthly) statement can provide raw data for your cash flow reconnaissance. However, make sure you're sitting down when you review the color-coded pie charts. There can be some shockers, like seeing 54.64% of your expenditures attributed to "merchandise/retail." (Yes, this is based on personal experience)

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Step 2: Count your cash Credit card financial forensics overlooks those daily splurges fueled by trips to the ATM. For out-of-pocket purchases, nothing beats a Post-It note, or the Fool's own stylish Spending Patch (pdf download). For one month -- or just a week if you can't stomach the task -- jot down all of your cash expenditures.

Lest you are tempted to skip this step, consider the all-too-personal scenario of spending just $7 a day during the week on salty snack food and caffeine. It adds up to nearly two grand over a single year. That's $2,000 that could go toward even more lovely "merchandise/retail."

Step 3: Come up with a "Spending Plan" After you get over the horror of your daily spending, go ahead and pick up a little something to lift your spirits. Go on a spending spree! Actually, sorry to dash your hopes so soon. This one doesn't involve a pit stop at the food court. It's more like a cerebral trip to the mall of life.

Start by listing five uses of your money that will positively affect your life in a decade or more. Then, list five uses of your money that will add little to your quality of life in a decade or more.

Voila! You have a "spending plan" (so much nicer than the word "budget," don't you think?) Meaning every time you whip out your wallet, you have a tangible list of money goals (and money pits) that will propel you financially forward.

Step 4: Stop spending on autopilot Now that you've visualized targeted spending -- and how it enhances or detracts from your life -- you can redirect your cash to ensure that it goes to the important stuff. The payoff is knowing that your money is being directed toward lasting, meaningful, and somewhat stylish "merchandise/retail."

Still, there will be moments of weakness. (Mine tend to happen at the flea market.) One way to stay strong is to set tangible limits on your spending. The "envelope" method can be an effective stopgap. Simply put the amount of cash you'll allow yourself to spend in an envelope marked "meals" or "happy hour" or "entertainment," and when the cash is gone, so is your weekly stipend.

Stay strong Still, it's easy to walk through life trailing frivolous expenditures and missed opportunities. There are many ways -- big (credit card interest!) and small (pedicure!) -- to fritter away your cash.

Even in my laziness, I think I can muster the energy to follow these four steps to control my cash flow.

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