Spending our hard-earned cash is all about making choices, and even though we might not consider our spending to be lavish or extravagant, it all adds up. Think about how often you buy coffee, go out for lunch, take the kids through the drive through, attend a show, have car repair bills – none of these expenses are right or wrong; they are simply decisions we make based on our priorities. It can be hard to determine your present priorities when you haven’t done any prior planning.
To get started with figuring out where your money is going, here are 5 things that will make it easier:
1. Understand Why it’s Important to Keep Track of Your Spending - While most people can pretty accurately list off the amounts of their monthly bills, discretionary expenses are harder to pinpoint. That’s why tracking is so crucial – it tells you where you’re actually spending your money.
2. Tracking vs Record Keeping; they’re not the Same Thing - There’s a big difference between tracking what you spend and keeping a record of your expenses. Record keeping helps you to stay on top of what you owe and to pay your bills on time. Tracking your spending involves a second step, namely looking at what you spent your money on. By looking at each item on a receipt you can identify your habits, see how much you actually spend and then make choices and decisions about how to change where you spend your money.
3. Don’t Make Your Spending Journal a Guilt Trip - Use Ekatra's expense tracker to track what you’re actually spending, not what you think you should be spending. You’re only cheating yourself if you selectively keep track of where you’re spending your money. When you start out, resist the temptation to adjust your spending as you start feeling guilty or begin to see patterns. After a week or two of gathering actual information, it’s then okay to start making choices about your priorities.
4. Use What You Know to Create Your Best Budget Ever - Gaining insight into your spending habits is like having a financial superpower – you can abolish debt, conquer your savings goals, and even make some dreams come true. Tracking is your first line of defense to getting a better handle on where you’re spending your money. Armed with actual numbers, you can outline a household budget that will really work.
Taking a few weeks each year to track what you spend –and why–is worth the effort. This ultimately ensures that your hard-earned money is there when you need it, and that’s worth banking on!