Tracking your spending is the first step to taking control of your finances and saving money. It can be a bit daunting at first, but seeing where your money is going is worth it.
Why is it important? Well, loads of people we know who have done this work are shocked to find out where their money goes. Some have streaming services they have forgotten about, and others had no idea how much their morning stop at the convenience store was costing them.
There are a few different ways to track your spending. You can use a budgeting app, a spreadsheet, or even a notebook. The most important thing is to find a method that works for you and stick to it.
If you're using a budgeting app, you can connect your bank accounts and credit cards so that the app automatically tracks your spending. This is the easiest way to track your spending, but it requires a little screen time.
If you're using a spreadsheet or notebook, you must manually enter your spending. This is more tedious but for those less “tech savvy” it might work well.
No matter which method you choose, there are a few things you'll need to track:
- The date of the purchase
- The merchant
- The amount of the purchase
- The category of the purchase (groceries, transportation, entertainment, etc.)
Once you've tracked your spending for a few weeks or months, you'll be able to see where your money is going. I’ll bet that most of you will be surprised to see where you spend the most time. Once you know where your money is going, you can change your spending habits.
Here are a few tips for tracking your spending:
- Be consistent. The more consistent you are with tracking your spending, the more accurate your results will be.
- Be honest. Don't try to hide any purchases from yourself.
- Be patient. It takes time to see the full picture of your spending.
Tracking your spending is the first step to taking control of your finances and saving money. It's not always easy, but it's worth it.
Additional tips
- Set a budget. Once you know where your money is going, you can create a budget to help you stay on track.
- Automate your savings. Set up automatic monthly transfers from your checking account to your savings account monthly. This will help you save money without even thinking about it.
- Cut back on unnecessary expenses. Take a close look at your spending and see where you can cut back. Are there any subscriptions you can cancel? Are there any expenses you can eliminate?
- Find ways to earn extra money. If you're struggling to make ends meet, consider finding ways to earn extra money. You could get a part-time job, start a side hustle, or sell some of your belongings.
By following these tips, you can take control of your spending and start saving money.
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