Continuing our series “Ten Smart Money Management Tips” and going hand-in-hand with our last post on getting organized, now we are going to discuss techniques to track your spending. Seeing exactly where your money goes will help identify areas where spending can be reduced. Then that “found” cash can go towards paying off long-term debt or into a savings/retirement fund.
Just like organizing your financial life, your method can be as simple as logging daily expenses into a three-ring binder or setting up an easy spreadsheet on your computer. For those of you who spend a lot of time on the computer, research on-line programs that can make this process automatic. There are lots of programs on the Internet available for tracking expenses. Some examples are: Quicken, Freshbooks and Google Docs Spreadsheets.
Track your Spending
It only takes four quick steps to figure it all out:
- Save all receipts for every purchase no matter how small.
- Use a debit or credit card for most of your expenditures. If you would rather use cash then designate a specific weekly amount for daily spending.
- Each day take a few minutes to update your records. By saving each and every receipt you’ll be able to include all those cash purchases for things like coffee and snacks. Check your bank account to track your debit purchases and log those also.
- Then when you sit down to pay your weekly household bills and balance your accounts, review the past week’s expenses. There is a good chance you will be surprised when you see how much you are spending on incidentals and non-essentials.
In addition to daily expenses, it’s helpful to also include reoccurring bills like utilities, credit card payments and auto loans. By adding these expenses on or around the same date each month, you’ll be more likely to get them paid on time, which then lessens late payment charges and increased interest rates.
Do you already track your expenses and perhaps have some helpful tips you’d like to share? Feel free to leave your comments in the “leave a reply” section below.