I know, it’s hard to imagine that tracking your spending could be fun. But once accomplished, it certainly can be rewarding.
Have you ever asked yourself any of these questions?
- Where did all my money go?
- Why can’t I save?
- What do I have to show for all my hard work?
If so, a little information could go a long way toward helping you answer these questions. And the person to provide that information is you.
There are many ways to track your spending:
- Develop a budget with two columns, one for your planned spending amounts and the other for your actual spending in each category
- Keep a notebook and just write in every amount spent in order by date
- Use a software system such as Quicken or an online system such as Mint
However you choose to track your spending, it’s important to be as thorough and accurate as possible:
- Pay multiple monthly bills at once, and log them in your spending-tracker at the same time
- Always request a receipt, even for the smallest of purchases
- Make sure to place these receipts in a single, consistent place until they are logged
- Log each purchase in a way that works for you – perhaps daily, or maybe twice a month
Next, it’s important to track all of your income. This is especially crucial if you have multiple jobs, earn tips, work as a freelancer, or have other irregular income. It’s a good idea to even include cash gifts, cashback rewards on your credit cards, or other one-time winnings.
Then, each month, you can total both your income and your spending, and see the results:
- How much did you spend in each category (i.e. groceries, entertainment, gifts, clothing)?
- How much do you have left for saving?
- Are there categories in which you can cut back on your spending?
- Can you choose to save in advance, to ensure that you don’t over-spend later?
After you’ve tracked your spending for an entire year, you’ll have a good idea of your spending patterns and totals on an annual basis. How much do you really need to earn each year? Can you lower your stress during a slow income month because your income usually rises in other months? Then, as the years pass, you can compare various years, and look back upon prior spending as a reference.
The pleasure of being able to understand your own money patterns over the long-term should help bring peace and reassurance to your life, so that you control your money rather than your money controlling you.