There is a reason that you are coming up short on funds. When I began my financial freedom journey I had to find the money leaks, because I was still coming up short even though I was following a budget. There was only one way to find out why and that was to track my expenses. That was the only way I was going to see where I was spending extra money. That is the only way you are going to see where you are spending extra money. You will never know where your money is going unless you track it. This may be a tedious task, but I promise you it works. If you want to touch the reality of your own situation, then tracking your spending is the way to do it.
You may THINK you are spending a certain amount on groceries, hobbies and transportation costs, but are you? If you track your spending then you will know EXACTLY what you spent. Keep reading for a few tip’s on how to track your spending and why you should.
- Be committed- Before you get started, you must be fully committed to your own cause. It will be boring, but by the time you are finished you will be very enlightened. Besides, if you don’t do it, then who will? Tracking your expenses is a very enlightening experience, but it won’t work without the full cooperation of your household. Basically, don’t go on this journey halfheartedly. You have got to want this just as much as you want to breathe.
- Keep receipts- For tracking daily cash expenses, such as, that morning cup of joe, I recommend keeping your receipts. If you don’t carry cash like me, then at the end of each day, pull your online bank statement and review any charges from that day. This needs to be done for a 30-90 period, in order to get a clear picture of where you money is going. This can be a hassle but it is necessary, so embrace it and carry on.
- Track normal spending- In addition to tracking daily expenses, you will want to track all of your normal expenses, such as car payments, utilities, groceries and entertainment. Remember, the goal is to get a clear picture of ALL of your spending, so you must track every transaction you make during this time.
- Tally it up- Once you have gathered your receipts and/or bank statements in one place, let the fun begin. Tally all of them up. You can start by putting similar purchases into categories that make sense. Your categories may vary depending on your specific circumstances; but the will most likely include things, such as, groceries, gas, restaurants, entertainment, clothing, medical bills/co-pays, hobbies, and home/car maintenance.
- Tell the truth and shame the devil, be honest with yourself- If you track your spending for the full 30-90 days and are shocked by the results, don’t make excuses for your behavior. Remember why you started tracking your expenses in the first place and try to learn something from the experience. If you don’t, you’re just resigning yourself to the life you’ve been living up to now.
Tracking your spending may be a hard, tedious task and it may be hard, but learning where the holes are in your finances is the easy part. Remember, you can’t change what you refuse to recognize and you can’t tackle a problem that you don’t understand. Tracking your expenses may be the most painful part of the road to financial freedom, but it is also the most important. Because, when you see your spending habits staring you in the face, you can’t p;ace the blame anywhere but where it lies and that is with you, the spender. You won’t be able to complain that you need a raise as the source of your woes.
We often create our own financial prison out of either habit, laziness or because we fail to plan. When we do, it is easy to blame everyone and everything else, and we feel that escape is impossible. That is why tracking your spending is a crucial part of the personal finance puzzle; it forces you to come face to face with the biggest threat to your financial future.
Have you ever tried to track your expenses? Comment below and let me know