How many times do we reach the end of the month and wonder what happened to our money? The only way to know is to implement a water-tight strategy to track your spending.
More and more Americans are living paycheck-to-paycheck, right? We talked about it here. And, there are haven’t been any positive updates. But, let’s say you have done all your homework. You have a budget, you are paying your bills on time, you are checking your credit report for errors and fixing them…basically, you’re doing everything you should. You read our article and are sealing up the money leaks. And, still, you having nothing left at the end of the month. But you should.
So, where is that money going? Do you have any idea of how much you spend every day? The big items, like mortgages, student loans, credit card bills, etc., are probably plugged into your budget. You have electronic or paper evidence of these payments. But, what gets us into trouble is those daily outlays, like for coffee, or soda or a slice of pizza. If you are not tracking your spending, you won’t have the foundation upon which to build a plan to improve your finances.
How do you Track Your Spending?
Tracking your spending means writing down, digitally or by hand, every expenditure you make each day. The idea is to have an accurate record of how much money is going out the door each month. Is it more than your income? Are you using your credit cards by the end of the month because you have already used up your income for the month? Are you spending an amount equivalent to what you earn? Does this leave you with anything for savings?
Why do you want to Track Your Spending?
With an accurate idea of how much money you are laying out and for what purpose, you can make a plan for how to improve your financial management and reach your fiscal goals. Tracking your spending may also reveal some surprises. Day to day, we can easily lose track of the money we spend. You stop to fill up the tank and make a few purchases from the mini-market. Do you need that stuff? You’re running late for work, so you stop by Starbucks, pick up a latte and croissant. Once a month may be okay, but are you doing this a few times a week? Once you see where your money is going, you can evaluate and develop a resistance plan to help you reign it in.
On the other hand, if you find that you are not spending money on things that are not absolutely necessary, and still you find yourself broke at the end of the month, then you need to look at how to increase your income. Joining the gig economy could be one way. Asking for a raise is another. Focusing on reducing credit card debt would be another way.
How to Track Your Spending
If you’re the kind of person who likes to see things on paper, then you can record your expenditures in a notebook. Carry it with you so that you can immediately record the amount of money you have just spent and for what purpose. They have special notebooks, known as expense trackers that come with graphics that make it easy for you to record your expenditures.
If paper is not your thing, you can keep track of your spending on your computer or tablet. You don’t need anything radically sophisticated—a simple excel spreadsheet will work. Create the categories and make a habit to sit down each night and plug in where you spent your money.
If you are totally digitized, there are many great apps that will help you track your spending. Each time you make an expenditure or pay a bill, put into the app. Mint will do a lot of the work for you. BUDGT is another good option. This app will let you record your expenses on a daily basis. It will create a new budget for you according to how you are spending. There are other apps too from simple to complex. Some apps will even save money for you, automatically rounding up your credit card expenditures, for instance, and send that to your savings account.
Bottom line: track your spending by whatever method works for you. The most important thing is to know where your money is going. Then, you can make the changes you need to get you on the road toward your financial goals.