Start telling your money where to go, rather than wondering where it went.

Most people want to be able to save money in order to have the things they need and want.

Unfortunately, we aren’t a nation of savers. Americans love to spend their hard earned-cash and use their plastic.

Usually the money we can’t account for doesn’t come from our large-dollar purchases, but from the small items we buy on a daily basis. The few dollars spent here or there can wreak havoc on any well-designed budget.

Little extras add up

Take the couple I overheard at a local ATM. It was 11 o’clock in the morning and the couple was just arriving in North Conway for a visit. One partner exclaimed that she couldn’t figure out where the $60 she took out of the bank that morning went, since she hadn’t started shopping yet. Ever find yourself in that position?

Think carefully about those “extras” you buy that can add up to hundreds, even thousands of dollars a year. Do you like to stop on your way to work to buy a cup of coffee? Do you sleep too late in the morning to make your own lunch before heading to work or school? Have you stopped to figure out how much your “extras” add up to?

Sit down and do the math

The exercise of sitting down to calculate how you spend your money can help you curb poor money management habits. For example, a $1.79 coffee five days a week adds up to $8.95 a week or $465.40 a year. For some individuals or families this would represent a large portion of their yearly electrical bill, or payment towards an outstanding medical bill.

One couple I know was purchasing four coffees a day because they believed neither one of them could make good coffee. Four coffees a day/seven days a week at $1.79 each added up to $2,606.24 a year, an amount that would have covered their annual property tax bill! Needless to say, this couple curbed their habit quickly and discovered that home brewed coffee tasted just as good.

How much work does it take to support your spending habits?

Another way to figure out exactly how much your habits cost is to figure out how many hours you have to work in order to support them. For example, Sandy makes $12.50 per hour and takes home $500 a week. If Sandy spent $5.50 daily to buy lunch, it would cost her $27.50 a week. To find out how many hours a week she has to work to afford lunch, divide the amount lunch cost ($27.50) by her hourly rate ($12.50). The answer is 2.20. In other words, Sandy would work almost 2 hours a week to pay for lunch. Over a year, she would work about 104 hours to pay for her habit.

Next time you don’t have enough time to make your lunch, think about having to work nearly three weeks a year to pay for lunch from a local deli. Bringing a sandwich, drink, fruit and a snack from home will probably sound inviting. If time is a factor, prepare a portion of it the night before.

Decide where to cut

To continue meeting your financial obligations, saving for goals, and feeling good at the same time, it’s important to look at where your money goes. Then you can determine how you can cut back. Use this exercise, not just for calculating how much you spend each year on coffee and meals away from home, but also on things such as lottery tickets, magazines, movie rentals, vending machine snacks, the local car wash and or the dry cleaners. Only you can determine how much you spend on those extras and what to do about it.

Remember, successful money managers control the way they spend their money, using it to accomplish the things that are important to them. Good money managers tell their money where to go instead of wondering where it went.

UNH Cooperative Extension offers educational programs on managing personal finances and written information on how to save money, develop a spending/savings plan and decrease debt.

Ann Hamilton is an Extension educator in family and consumer resources with the University of New Hampshire Cooperative Extension in CarrollCounty.