Kara Herman Fransted is the Chief Operations Officer at KMH Financial Services, LLC.
I admit that I am a huge lover of Amazon and Target. It’s wonderfully convenient to buy everything you need all in one place and even better, they deliver it to you!! The problem is that it’s hard to classify in a budget. We get to the end of the month and don’t remember what we have spent at those places or why.
After a few years of categorizing places like Amazon and Target separately, under the category “Amazon” or “Home Items” I couldn’t figure out why we were spending so much in those categories. After telling Kim about my issues, she suggested that I break down each purchase. At first I balked. “OK Mom that’s going to take forever”. But as time went on and I still wasn’t seeing the numbers I wanted, I started to break down each purchase to see what we were buying.
When we go to target, we pick up prescriptions, groceries, new clothes, and home supplies. That’s not an all-encompassing list but that’s 4 different budget categories right there. The problem was that I never knew exactly how much I was spending on each of those things. It got to a point where most of our spending was going to those catch all places like Amazon and Target so I was almost blind to our spending in individual categories.
Then, I started to breakdown each purchase. I would go back through my Amazon orders and see what we spent on different categories. Household supplies would be recategorized into Kids clothes, groceries, prescriptions and more. In our Budgeting program, WealthVision, transactions can even be split if you paid $30 for a prescription and want that to go under Medical but paid $150 for back to school items and want to put those under Kid’s items. I quickly began to see that knowing what category each item went in made it much easier for us to cut back on things we really didn’t need.
If you aren’t seeing the changes you want, maybe you don’t know where exactly you are spending your money. We saw a huge difference and it didn’t take anywhere near as much time as I thought.