Canadian Finance Blog

Posted: 03 Feb 2011 02:00 AM PST

Have you gone through your dirty clothing while doing the laundry, tucked your hand into a pocket, and discovered a crumpled up bill? If so, then you know how delightful such a discovery can be. I have a friend who purposefully does this, actually. He’ll hide a bill somewhere, just so he can find it a few weeks later. I think he’s a little bit crazy, certainly, but there is something to be said about the quick rush finding money brings us.

So, what if you applied that same concept to your daily financial situation? How would you feel if you knew you could find money in the forgotten nooks and crannies of your budget? You’d get right down to searching, wouldn’t you? Let’s give it a try.

Financial Goals

Your first task when cleaning out your budget is to make a list of short term and long term financial goals. These can be as simple as reducing your credit card debt each month or as complicated as setting aside a certain percentage of money in order to retire by age sixty. In either case, you should make a list of financial goals if you haven’t already done so. If you have done this already, pull out the list and dust it off.

Categorize Your Budget

Your next step is to check how the different categories of your budget match up with your list of short term and long term goals. Look at this list and at your categories. Where can you tweak your budget to free up some money to shift to that long term goal of reaching a happy retirement? What in your budget can you adjust so that you can eventually buy that new car you need? Answer these questions by playing around with the different categories and compare them to your necessary spending habits to see what you can afford to change and what must remain the same. Here you’re basically crunching some numbers. The important step is the next one.

Spending Habits

Finally, look at your unnecessary spending habits. You should have an itemized list of all the things you’ve spent money on each month, and in this list you will find certain items that no doubt slipped through. Highlight these and see if you can find a pattern. Do you spend money on coffee every morning? If so, how much? Does spending money on that coffee help you reach your goal of saving enough money to take a vacation next summer? Is the cost of the coffee worth the happiness it gives you each morning on your way to work? These are the kinds of questions you need to ask, because maybe you’ll find that you do, in fact, need that coffee. If that’s the case, then you’ll need to find another unnecessary habit to evaluate in order to free up some hidden cash. The key here is that you must change a habit or two in order to get that hidden money.

Ultimately, the point of this post is this: we must constantly evaluate our budget and our spending habits. Doing laundry isn’t fun, sure, but it’s important. So is going over our budgets. And, sometimes, we can find a hidden dollar or too if we’re careful enough. So, maybe it is fun after all.

Author Bio: This guest post is contributed by Raine Parker, who writes on the topics of online accounting degree. She welcomes your comments at her email Id: raine.parker6@gmail.com.

Clean Your Budget to Find Hidden Cash originally appeared on Canadian Finance Blog on February 3, 2011.