Making Tracking Spending Easier
One of the most important parts of sticking to a budget is tracking spending. Many people get to the end of the month, look back, and wonder where their money went. This is a major reason why a lot of people overspend: they simply don’t know where their money is going.
When you track your spending, not only do you get to see exactly where you’re spending money, but reviewing your spending can help you spot trends and make changes. The entire process makes it much easier to stick to a budget.
The good news is that tracking your spending doesn’t have to be a complicated process if you don’t want it to be. Here are five tips for tracking spending that will make sure that you always know where your money is being spent.
Choose a Method
Some people have a lot of success by simply saving receipts and writing down everything they spend in a notepad. Others like to use a spreadsheet on their computer or an app on their phone. No method is incorrect and everyone will have a different method that works for them.
Some of your friends may swear by a certain app, website or spreadsheet template. That’s okay. While they may have a method that works for them, everyone is different. While you may want to listen to advice from friends, family members and experts, ultimately, you’ll need to choose the tracking method that works best for you.
If tracking your spending isn’t easy, convenient and comfortable for you, you won’t keep doing it. With that in mind, choose a method that works for you, regardless of what friends or experts say.
It might seem trivial to track every single purchase that you make, but it’s important. Why? Because small costs add up. Plus, when you track everything, trends become more evident. So, even if you buy a pack of gum for $1.50, write it down or put it in your app.
After all, four packs of gum in a month is $6. Add in three bags of chips at $1.75 each and you’re at $11.25. This amount can make a difference in a budget, so you’ll need to track these expenses.
It can help to always ask for receipts whenever you make a purchase and to save them. Then, at the end of the day, you can go through your receipts and record your spending. Of course, if you find it easier or more reliable to take note of every expense right after you make the purchase, feel free to do this. Remember, it’s all about finding a method that works for you.
Don’t just track your spending for a month and stop. To get all of the benefits of this practice, you’ll need to be in it for the long haul. Your exact purchases will change from month to month but, over time, you’ll start to see trends emerge. For example, after tracking for a few months, you might notice that you spend a lot more than you expected on clothing. This trend wouldn’t be evident if you didn’t track for an extended period of time. You might not buy clothes every month but overall, the trend will appear if you track long enough.
Once you’ve recognized trends and made changes to your budget, it doesn’t mean that it’s time to stop tracking either. You’ll need to keep recording your expenses so that you can see if your changes worked and to keep you accountable to your budget.
A lot of people don’t want to talk about how much they spend and how they spend it. In our culture, money isn’t something that many of us discuss. However, it can be good motivation to tell a trusted loved one that you’re tracking your spending. Why? Because then he or she can hold you accountable.
You don’t necessarily need to divulge the details of your spending or tell anyone how much you spend, but letting someone know that you’re tracking is a good idea. Plus, they might be able to give you some helpful tips!
Something that many people do when they’re tracking spending is, at the end of the month, they look back at their spending and try to justify every purchase. This often isn’t productive. Remember, you’re tracking your spending because you want to learn something about your spending habits and you’re hoping to make changes for the better. Justifying every dollar you spend doesn’t give you an opportunity to do this.
Instead, look back at your spending with a critical eye. This will allow you to be more objective and to cut expenses that you don’t consider worth it.