Wake Up and Smell the Shoebox: 5 Steps to Measure Physician Family Spending

Last week, one of my readers took me to task on a post about why I hate Quicken. So today I'm going to show you a simple, powerful way to get a grip on how much money you spend to support your standard of living. I call it the Shoebox Exercise. Follow these steps to get some idea about how much money you're spending each month to support your family.

Step 1: Get a shoebox!

Just about any shoebox will do, but make sure it's big enough to hold a standard #10 envelope and some crumpled up papers.

Step 2: Seize the day.

You'll be doing the Shoebox Exercise for a 30-day period, but not all 30-day periods are created equal. Try to pick a 30-day period that does not contain a major money-spending holiday (like the 4th of July if you often travel then, or Christmas or Hanukkah if you give big gifts or make large donations). Sure, it's important to measure this kind of spending too, but just trust me here. The Shoebox Exercise goes much more smoothly if you don't start during these holiday period. In fact, May is a great month to begin. It's after tax season, but before summer begins. Make it a specific month-long period, like "May 13th through June 13th".

Step 3: Engage the family.

let everybody know that you're going to be measuring your spending for one full month, beginning on your chosen day, and ask the whole family to join in. That means mom, dad, and all the people who mom and dad support like kids and extended famly if you're responsible for them, too. Make sure everyone knows that you're only measuring spending, not asking them to budget or to spend less. You just want to get an idea about how much money is going out the door in a quasi-average month.

Step 4: Just do it!

OK, I couldn't resist a shoe-based slogan to kick off the Shoebox Exercise, but you need to start the exercise, and don't stop until 30 days have passed. In a place where veryone can find it (like on top of the fridge, in the center fo the kitchen table, or near a doorway everybody uses), place the shoebox with the lid off.

Every day when you check the mail or receive a bill, put the bill in the shoebox. If you get a credit card statement or a bank statement, put it in the shoebox, too.

If you're an ATM user, put your ATM slip in your pocket, take it home with you, and on the slip, write a little note that tells how you spent the cash. Put the ATM slip in the box, too.

If you make online purchases and receive email receipts, print them out and put them in the box.

Step 5: Empty the box.

At the end of the month-long period, dump the box out on the kitchen table. Grab the first piece of paper you see and, on a clean sheet of paper, write down the total of how much you spent. For example, if you're looking at a credit card statement, total up the items that fall in your date range, but don't deduct any payments you made. Repeat this exercise for every item in the box. Total your month's worth of expenenses at the bottom of the page.

When you empty the box, it's best to have all of your family members gathered around you, and participating in this step of the exercise. Why? Because you want them involved in the process long before you get to the grand total, just to make sure there's a forum to discuss any issues that may come up after you've done the math.

Now What?

If the Shoebox Exercise seems a little simplistic, then you're reading this correctly. It IS simplistic. But it's also very powerful. I can promise you that if you've never done something like this before, you'll gain more insight into how you handle money than you've ever had before.

It works, but only if you work it. So get yourself a shebox, gather your family, and get smart about your spending. And yes, you can tell everybody it was my idea to buy a new pair of shoes so that you could get the box they came in. ;)