Track your Spending

Track your spending

This is part two in a series on how to arrange your finances.  If you haven’t already read part 1 to get off on the right track.

When you track your spending it will do a few things for you. It will help you determine where your money is really going each month. Many times we think we know how we are spending our money, but forget about little purchases we make along the way; nickle and diming your self, so to speak.

Secondly, you will actually spend your money more wisely. There is something about tracking spending that will make you think about purchases. It causes you to make more deliberate decisions when you are spending your money.

There are a couple of different ways to go about this. Feel free to use which ever one works for you. The importance is not in how you get it done but simply that you get it done.

I suggest signing up for mint.com or a similar service. This will import your records from your checking account and help you to categorize them appropriately. Although watch out, they are not always right, or the categories may be too broad.

Secondly, you can track your spending by hand. Keep receipts for everything you spend and write it all down. This way requires a bit more work on your end, but will help you more in controlling your spending, who wants to manually write down junk spending?

Once you have tracked your money for a month, you should have captured a majority of your spending and have a good idea of where you are starting from.  It will make the following steps more easy and accurate.

Image by Ken Teegardin