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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.
- 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.
- 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.
- 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.
- 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