Tracking Spending and A Spending Plan Finds Extra Money

Situation:
Individuals often do not know how much their living expenses are each month. Discovering where your money goes is a critical step in becoming an effective money manager. Keeping a record of expenditures is also an important part of planning and controlling your spending. Choosing a tracking method and keeping good records help individuals reach the goals and dreams they desire.

Response:
ISU Extension contracts with ISED to teach a basic financial literacy class for individuals enrolled in the ”Iowa Saves” program. This class is 12 hours of instruction and is usually taught over a six-week period. Most of the students in the class are there because they are trying to repair the mistakes they have made in the past with their finances. Some have had problems with credit. Others have had problems with checking accounts and keeping their checkbooks balanced. There is an income eligibility limit for the participants and all must have a job. As part of the basic financial literacy class, individuals are required to track their spending over the six-week period by writing down everything they spend in a small notebook. They also must make a Spending Plan to help determine their monthly expenses and income. The class then shows them various ways to track their spending, how to estimate what their expenses should be for various categories, and how to make a spending plan to include savings for dreams and goals they may have.

Results:
Approximately 12 people were a part of the financial literacy class February and March of 2005. A pre and post evaluation was given to participants. All of the participants tracked their spending over the 6-week class. All of them also indicated that they felt much more confident about dealing with the management of their money after this class.

One participant, a female, did her spending plan as part of the first class and was very discouraged because it indicated that she was spending $150 more each month than she and her husband were earning. Although her husband was not taking the class, this exercise encouraged her to communicate with him and try to trim down their expenses. Food costs were much higher than was given on the USDA Cost of Food Expenses for their family size. They discovered that they were throwing away leftover food instead of utilizing it for lunches. Buying lunches out several times each week was much more expensive than they realized. She also convinced her husband that buying “generic” brand foods at a less price sometimes was just as good as label brands. They also discovered that they could save on gas by riding together and better communicating to each other about needed supplies. They joined the Share Iowa food program and had their children help with the volunteer project that was associated with this project. By graduation night (6 weeks later), this student had trimmed enough expenses to have a positive $150 to save for emergencies, future dreams, and retirement. She also was planning to contribute more money to her retirement plan at work. Tracking spending was a big eye opening experience for this student and has since changed this family’s whole attitude toward money management.

Contact:
Margaret VanGinkel
Family Resource Management Specialist
10861 Douglas, Ste. B
Urbandale, Iowa 50322
Phone 515-727-0656
Email vangin@iastate.edu