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Years ago I used to wonder what happened to the money every month. We had a good income and no extravagant expenditures. But when we added up all the expenses we met that old saying.  Yes, there was more month than money all the time.

Tracking My Spending

That's when I figured a change needed to be made. I needed to track money by tracking the spending. But how? Here are four ways to follow the trail.

  1. Notepad. Carry a small notepad with you and write down every expenditure no matter how small; it may surprise you how those one or two dollar items add up! Don't forget the pen or pencil.
  2. Sticky Note. Pay for everything with your credit or debit card and keep a history on a sticky note attached to each card. To help you reconcile spending some credit card issuers automatically report transactions by category on their website or statements.
  3. Save Receipts. Get a receipt for every transaction and store them in a safe place such as an old coffee can or vase. This makes it easy to reconcile them regularly. Afterewards use your normal receipt management system.
  4. Envelopes. If you have a budget but have trouble following it, then the envelope system might work. Use one envelope for each expense category in your budget and put the budgeted amount in there each pay period. As you spend write the transaction details on the envelope.

No matter which method you use, organize the transactions into categories. Then compare them against your budget on a regular basis. Some people might track it daily but I recommend at least once a week. Don't go more than a month or it can become an overwhelming task.

Now that you know where your money goes, it is possible to create or adjust the budget to meet your needs. You may also find areas where spending should be cut in order to meet your obligations and goals.

Tracking your spending is an important step in controlling your finances. What method do you use to document spending?

Photo Credit: Sterlic

About Kay Lynn

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9 comments add your comment

  1. These are all great methods for tracking spending. For me, I usually put all of my incidental expenses on a credit card, then pay it off when the bill comes. I use mint to help me budget, and it’s been working great for me so far.

    • This reminds me of a food journal when you are trying to lose weight. The benefits are immense, because it makes you aware of what you are spending your money on. You can not change your habits until you are aware of them. Since I use my credit card for everything, it automatically categorizes the expenses for me. My other bills I can add to my spreadsheet.

      • I am not naturally organized so work hard at systems to help me. Whenever I get out of control with spending, it’s because I’m not tracking.

        It sounds like you’re better at it.

    • I have been using Mint for a couple of months. I like it for categorizing and tracking non-cash spending.

    • Since Microsoft Money is no longer being updated, I am still on the hunt for a good replacement. Quicken is probably it, but I’m cheap!

  2. I do the same a Jeff…we use a CC for 99% of our expenses. This gives us a good look at how our money is spent. I have been using Quicken since 1991 and recently started using I am “retired” and my wife is still working hopefully for a few more years. Mint does a nice job in showing your net income and comparisons over the year(s).

  3. These are great methods that my wife and I tried unsuccessfully. We just couldn’t get into the swing of things. Recently we came across a free service called Chext. It let’s my wife and I track our spending use text messages. Since we always have our phones on us, it was a lot easier to get into the habit. As soon as we text something in it sends a text back to both of us with our new balance. It’s a very simple program and has some other neat features like a cash flow calendar. I’d highly recommend it to anyone!