The first step in gaining control of your finances is knowing exactly where your money is going. You would be surprised how much money you spend on a quick run to the store here or a soda from the vending machine there. It’s impossible to track everything in your head. You might think you have a good handle on your monthly bills, but you’ll be amazed at how much you spend on your daily expenses.
If you are truly serious about gaining control of your finances, you need to know where every dollar goes. Every spontaneous shopping trip, even that fruity drink you had with dinner one night, I can’t stress enough how crucial it is to keep track of EVERYTHING!
When you can easily see where each dollar is going, you might find some small changes that could greatly impact your financial situation. This could help you stretch your paycheck a little further, help you contribute more money to paying off your debt, or help build your savings.
I will show you how to do it.
What are your expenses?
Grab a piece of paper and write down every expense you can think of. This includes any monthly bills, or any regular activities you do.
Here is what some of my categories look like:
- Rent & Water
- Health Insurance
- Car insurance
- Renter’s Insurance
- Cell Phone
- Netflix Subscription
When you are first starting out, start with the basics. Your spending habits will help you create your categories. For example, if you find yourself sitting in a doctor’s office at least once a month, you might consider adding a category for doctor’s visits.
If you don’t already have a budget or you are tracking your expenses for the first time, make your categories as broad as possible.
Choose your method of tracking
I personally chose Mint to track my spending. All you need to do is add your bank accounts, and that’s it! It does all the work for you. If you don’t want your financial information given to a third party, you can always use Excel, or the old fashioned pen and paper.
Even though I use Mint, I personally like to have a printout to keep track of what I’ve already paid and when due dates are. I recommend being redundant and keeping both if you are able to, but one will work just fine.
Keep your hard copy on the fridge, or somewhere you will see it all the time. I keep my print out in my purse with me, so I can check on our spending in my spare time.
Below is the Expense Tracker I use to track my spending. There is a place for you to put the date, and whether you used cash, debit, or credit to pay for your purchase. There are seven blank spaces for you to put in your own categories. This chart works best if used for daily expenses rather than bills.
Use my expense tracker to get organized and help you track every cent!
I’d recommend tracking your expenses for 1-2 months to really get a sense of where you’re spending your money. Once you have a good idea of your spending habits, and how you want to spend your money, it’s time to create a budget!
Check back next Friday for How to gain control of your finances: Creating a budget.