Let’s face it, tracking expenses isn’t the most exciting way to spend your time, but when you discover ways to tighten the pocketbook and see your bank account swell with savings, you’ll be thrilled. Many of us already feel like we are living well within our means, but the truth is there is always room for improvement – and there are likely plenty of “leaks” in your spending you don’t even realize exist. The difficult part is getting into the habit of writing everything down. Then, it’s keeping that commitment and ultimately, adjusting behavior that actually constitutes positive change.
Open a Spreadsheet
The first step in tracking is to gain an idea as to what money is currently coming in and going out. You’ll want to look at all of your account statements including credit and debit cards and checking accounts. Also, make a list of regular payments including utilities, mortgage, taxes, cell phone, fuel, waste disposal, etc. This will give you an accurate picture of outgoing funds.
When you analyze your accounts, take a look at the categories you spend most of your money. This might be trips to Walmart or fast-food restaurants. Take-out in general, might be an area that is costing you $100 every other week. When you put figures in black and white in front of you, there’s no denying them and it’s bound to shed light on your situation.
Alternatives to consider
- Like ordering take-out food? Try limiting it to once or twice every other week. Prepare a tasty lunch and dinner menu and take a trip to the store for the items. Meal prep is a great way not only to save money but to also budget calorie intake wisely.
- Review your car insurance. Chances are good you haven’t taken a look at your insurance policies recently. Now is the time to find cheap auto insurance to reduce your monthly costs while keeping you firmly in the driver’s seat. Comparing quotes is the best way to save money.
- Cut the cable cord. Cable has been an American staple for decades, but it’s quickly losing its appeal to less costly – even free – online streaming entertainment.
Use a Great Budgeting App
There are numerous apps available that are designed to help you budget your money. They will connect your spending habits with your financial accounts so you can determine where your money is going and where you can cut back.
- Goodbudget. This unique app uses the envelope budgeting system which helps you plan for future expenses. If you’re looking for an app that will track previous expenses, this app isn’t for you. However, if you are diligent and consistent with your tracking efforts, this app will help you allocate funds to various goals (envelopes).
- Mint. This app is highly rated and has glowing reviews in the App Store. It syncs all of your accounts and will put all of your spending habits into categories for you to review. You can even set your own limits for categories and the app will alert you when you’re approaching that limit.
- PocketGuard. This app connects all of your accounts and lets you know how much you will have left over after your regular commitments (such as utilities and other bills). You also do have the option to do this yourself manually instead of linking your accounts.
Track as You Go
While it might seem tedious, carrying a notebook around with you (in your purse or in your car) and then writing down how much you’ve spent on what and where, will accomplish two things: it will remind you of how much you really are spending and it will create a rolling aggregate of your expenditures. It’s easy to swipe a credit card but it’s eye-opening to see a list of purchases you’ve made over the last week or even the last day.
The idea here is to hold yourself fully accountable. When those purchases are in black and white in front of you, they become extremely hard to ignore. At some point, you’re likely to skip a purchase or at the very least, find a less costly alternative.
Move to an All Cash Approach
Along the same lines as writing down all of your purchases, choosing to forgo the credit cards and use only cash will hold you strictly accountable to your budgetary limitations. At the beginning of the week, allow yourself X amount of dollars to spend and don’t go over that bar that you’ve set. Using a credit card is like using ‘invisible’ money that you might not feel accountable for, creating the opportunity to spiral into bad debt.
Don’t let your money sift through your fingers like water. Take control of your spending habits now and watch your savings grow so you can take positive steps toward future financial goals.