Legally Thrifty: Resolving to Be Financially Conscious for 2012

“Personal” and “Finance”. Why do these two little words put together create apprehension in the likes of the other two little words known as the bar exam?

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Money is a difficult topic to discuss with others or to even think about with regard to your own situation. No one wants to have to worry about money or be afraid of being judged for how they spend their money. Well here comes Legally Thrifty, your friendly neighborhood guide for beginners in personal finance, and since we still enjoy shopping like the next gal, in budget-friendly shopping tips and deals as well.

First, make a New Year’s resolution to be financially conscious (and read Legally Thrifty every month!), and follow the steps below to set up your tracking and budgeting.


Step 1: Choose your financial tool and start tracking expenses.

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To begin your personal financial journey, you will need to start keeping track of your daily, weekly, and monthly expenses. It’s not as daunting as it seems, once you get into the habit of it. In fact, it can get downright addicting, to watch your money move and to feel success on a low spend day. Here is a rundown of the most popular tools for financial tracking.


If you’re technologically savvy and constantly on-the-go, may be your best bet. Sign up for a free account and all your finances will be at your fingertips. lets you organize your spending into categories and gives you an overall picture of your spending habits. You’ll be able to update your finances from your smart phone, which means less chance of forgetting to track your dollars.


  • Quicken

If you prefer to have a program installed on your computer, Quicken’s financial software is ideal for managing all your finances. It’s also better suited for organizing more complicated finances that include rental property, business, and investments. You can choose from an array of software products at, starting at $59.99.


If you want to use something basic and commitment free, PearBudget offers a free 30 day trial and a monthly online subscription of $4.95 per month. The downside is that you don’t have the option of tracking investments or income growth. However, their tracking and budgeting tool is good for beginners so you may want to give PearBudget a trial run.


  • Microsoft Excel or Open Office Spreadsheet

If you’re old school like me, you can track your expenses in an Excel spreadsheet in lieu or in addition to using I like having control over my layout and manually tabulating my expenses for each day with the Excel formulas. In the end, go with whatever method works for you.


My spending categories include transportation, shopping, and entertainment. In my Excel spreadsheet, I have two columns for dining because I like to separate each purchase, rather than lump say lunch and dinner into one sum if I happened to eat out twice that day. Remember to keep your receipts until you can input what you spent into your chart or spreadsheet. At the end of the month, you can see the total spending for each category. You may be surprised at how a daily coffee at Starbucks can quickly add up.


Step 2: Create a budget for spending in each category.

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After keeping track of your expenses for a month or two, it’s time to determine your budget depending on how much you want to be spending in each category.


(1) The recommended percentage of your income spent on housing is anywhere from 25% to 40%, which should include related bills like utilities. Unfortunately, for those of us living in a high cost area, rent will most likely be on the higher end. For those with mortgage payments, paying off the monthly mortgage will constitute housing.

(2) After housing, look at how much of your income goes towards fixed bills such as loan payments and health insurance. Whatever is left becomes flexible spending. Many people view savings and investments as an inflexible part of their budget. Once again, this part is up to you, the individual, when it comes to mapping your personal finance. If you have any income left after paying fixed bills and allotting for flexible spending, you can decide to contribute a set amount towards your Roth IRA, 401k, or other savings and investments.


Furthermore, if you don’t have an emergency fund yet, start building one. You never know what might happen and it’s always good to be prepared for the worst case scenarios, such as unanticipated car repairs or sudden unemployment. Your emergency fund should be able to cover a year’s worth of living costs and expenses. However, anywhere from a couple thousand to ten thousand dollars is a good starting cushion.

Ultimately, no matter what your salary, you want to be contributing as much as possible (while still enjoying life) to either loan repayment or to savings and investments. Look at categories where you can reduce spending. Going along with the Starbucks example, let’s say that your morning coffee and pastry sets you back $7 per day, $35 per week, resulting in an average of $140 per month. By eating breakfast at home or limiting your coffee to 2 or 3 times per week, you can reduce your Starbucks expenditure to at least half the monthly expenditure.

You also have the final say in your spending priorities. If you’re looking to reduce your overall spending but don’t want to cut down in some areas, there are definitely other areas where you can trim the spending.


Becoming financially conscious doesn’t happen overnight and it doesn’t mean sticking to a military-like regime. We are only human and the only way to learn what is best for us is through trial and error. I admit that for 2012, I need to better work on creating a budget and sticking to the spending limits for each category. Thus I am not exempting myself from the resolution to be more financially conscious.

What are your 2012 financial resolutions, if any? Mine will be revealed in next month’s episode of Legally Thrifty.




Awesome intro to your blog! I look forward to following and learning from Legally Thrifty!

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