I have talked before about the importance of creating a budget and telling your money where to go. However, in order to truly understand your financial situation you need to know where every penny is being spent. Simply put, in order for you to know your numbers, you need to track your spending. Knowing where you are financially will help to optimize your debt repayment plans or other financial goals. Unless of course, you have more money than you know what to do with. In that case, I have a few suggestions for you!
What’s The Point Of Tracking Your Spending?
Have you ever heard the saying, “knowledge is power”? Well, this is as powerful as it gets. Tracking your spending is as fundamental as learning to walk. If you want to make your money work for you, then you have to know where you are spending it. Once you have that figured out, you can begin to make real changes.
By tracking your spending you may find your saving money at the gas pump due to your perks savings card. On the other hand you may discover that you spent over $300.00 eating out last month. Unfortunately, my own family was guilty of that. We knew we spent a lot eating out, but until we stated tracking our expenses we had no idea just how much it was.
Tracking your Spending Is Easier Than You May Have Thought.
Now that you have decided (hopefully) to start tracking your spending there are several options to choose from. There is no one “best way” to track your spending, the important thing is to find what works best for you, and that it gives you an accurate picture of your finances.
- Go Old School – simply purchase a small spiral bound notebook that will fit in your purse and track every purchase as you make it. You can create categories such as food, transportation, fun and household. That way you can see at a glance how much you’re spending in each category.
- The Envelop System – If you are a Dave Ramsey fan like me, you’ll be failure with this method of budgeting and spending. While this tracking specifically it is a way to keep your spending under control. Once the money in that envelop is spent, it’s gone until your next pay day.
- Budgeting Websites – There are several budgeting websites like Mint and Quicken Books Online are very popular choices that work very well for some people. However, for others, like me, they are not a great fit. If that is the case there is software available for you to use as well.
- Budgeting Software – You have lots of options for software ranging from creating an Excel spread sheet to Quicken. My personal favorite is You Need A Budget (affiliate link), or YNAB for short. *By fallowing the link to YNAB there is a 10% discount if you decide to purchase the software.
The point I’m trying to make here is that you need to find a method that sounds like it would work best for you and go for it. If after a month or two it’s not working as planned then try a new system, but don’t give up! Remember you must learn to walk before you can run to the debt freedom finish line!
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