Have you ever wondered where all your money went? I think we have all done this at least once in our lives.
Lately, I have been learning the importance of awareness. Tracking expenses brings an awareness to what you do with your money.
So, how do you track your expenses? Here are four steps:
First, decide where you will track your expenses. You have several options:
- Notebook (pen and paper)
- Calendar or planner (just write the amount you spend each day on the day)
- Envelopes (put cash in each category and write the running total on the envelope)
- Computer programs (spreadsheets specifically)
- Phone apps (There are many to choose from. My favorite right now, because it is simple, is Goodbudget.)
Second, set aside a specific time to track your expenses. You could do this (1) right after you spend money, (2) at the end of each day, or (3) on a specific day each week.
Unless you really don’t spend money very often, I would recommend tracking your expenses no less than once a week.
Third, take note of each time you spend money, in whatever form and at the time you decide. Make sure to note these three things:
- how much you spent
- where you spent it
- what you spent it on. You can get as specific as you want or keep it to general categories. I’ll talk about this more in a future post on budgeting, so keep an eye out.
Fourth, after tracking your expenses for a couple months, create and follow a budget. Continue tracking your expenses to keep you aware of any needed adjustments as time goes on. Be patient with yourself, as it takes a few months to get an accurate picture of what your budget needs to look like for your family.
If you would like some help implementing these strategies or extra help with your finances, schedule a FREE financial coaching consultation here.