The first in this series was about budget planning.
Now let’s talk about tracking our spending habits!

What are your largest expenses?

Let’s start with the biggest expenses.  Typically that is housing (the rent or the mortgage).  For many households, it can also be debt which might include student loans, car payments, or credit card payments.  Child care and medical care can also take a big chunk out of your paycheck.  Some of these expenses are fixed which means there is no flexibility in the minimum payment.

Where can you save money on outgoing expenses?

While some expenditures are fixed such as the rent, some are more fluid such as groceries or entertainment.  If you wonder why your money runs out long before the month runs out, tracking your spending will help narrow down what is happening with the money.  Oftentimes, it is a $5 coffee here or a $10 movie ticket there but it all adds up.  I am a huge spreadsheet girl and I have created several to track expenses.  At one point, my grocery bill was out of control so I even broke the grocery bill down into its own spreadsheet – hand-entering how much we spent on dog food and coffee creamer and ice cream. Once you have a better handle on the spending, you can start to figure out where you could start saving.  Can you download apps to take advantage of grocery store sales?  Can you start eating leftovers more often?  If you go out to eat, can you reduce your alcohol tab or maybe even split a meal with a friend?

What do you want to use that savings toward?

Now all of this tracking only benefits you if you have a goal in mind.  Once you carve out that extra money, what will you do with it?  Do you want to reduce your debt?  Do you want to take a vacation?  Maybe you just need to build up a nice cushion in your savings account.  If you start to miss that $5 coffee, it will be easier to stay on track if you keep your ultimate goal in mind.  There is no incentive if you don’t know what you are working towards!