Where Did All That Extra Cash Go?

Where did all that extra cash go?

You may have gotten a raise in your salary, a cost of living allowance increase, get promoted or even find additional source/s of income. Yet when you look at it, you have not made significant increase to your savings and/or investments. Whether you admit it or not, there were instances that you may have asked yourself “where did all that extra cash go?”

The answer is pretty simple: You have adjusted your lifestyle accordingly.

These changes in your lifestyle may be quite subtle that you, yourself could barely feel or think would have any impact in your finances like a few additional items in your grocery list or eating out a little more often. They may also be more noticeable adjustments like taking a cab to work when you used to take the bus; watching movies in the big screen instead of just renting DVDs or even moving into a bigger apartment.

These are but some changes you may make in your life when you know you have more money to spend. They may take up most if not all of your added funds. However, after thinking about it and still you are not certain on how to account for your seemingly missing extra cash, the obvious solution is to list down your expenses. This would best explain and address your concerns especially when you already have a list of expenses for your previous budget – before the additional money came in. In this case, you only need to compare your previous and current expense lists.

Aside from exhausting your extra funds, you should be more wary of an even greater danger that the increase in your expenses from the change in your lifestyle is more than the increase in your income. If this is the case, instead of building up your savings due to the rise in your income, you might find your savings slowly dissipating and worse, you could even start accumulating debts.

The best way of disciplining yourself is to make arrangements such as salary allotment to put a portion of your raise to your savings and/or investment fund. In this way, the extra money is put away even before you can get hold of it. Remember the right formula to financial success is INCOME – SAVINGS = EXPENSES (as opposed to the traditional concept of INCOME – EXPENSES = SAVINGS).

It’s not wrong to reward yourself from the fruits of your labor. You deserve to take some form of pleasure after a hard day’s work. What is unwise however is to reap ALL the rewards NOW, leaving nothing for your enjoyment later in life.

So next time you wonder where did all that extra cash go, do not put all the blame on the economy and inflation because you know better.