Tracking Your Spending

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You’ve heard it over and over again from financial planners, “Track your spending!” Many of us blow off the advise—we may dread the thought, assume we know where our money goes, or feel “above” having to do so. But, recording our expenditures, for even a month, will allow us to become much more effective money managers.

Why bother?

• Learn where you’re actually spending rather than where you think you’re spending.

• Discover where you spend way more on that your realize.

• Decide where to cut back.

• Help you live within your income.

• Get control of your money. Awareness alone will cause you to spend less.

• Evaluate whether or not your spending reinforces your values.

The consumer credit counselors at ClearPoint Credit Counseling Solutions (CCCS) recommend that those wishing to control their spending start tracking immediately.  They offer the following 10 ways to do so.

Top 10 methods for tracking spending

  1. Commit to it. If you don’t believe in the benefits listed above, don’t make the effort. Tracking is tedious and if you’re not motivated, why waste your time?
  2. Chose your method. Some people jot down every expense made throughout their day in a notebook.  Many spend only with cash, save receipts, and tally them at the end of the week. A PDA is most convenient for some while others prefer using post-its or charging everything on a debit or credit card.  Do what works best for you.
  3. Create your spending categories. Again, you have options. The simplest method is separating your documentation into envelopes for specific areas.  Another is creating a basic worksheet on Excel—this is nice because you can easily sum your columns.  If you’re not computer savvy, just create columns for your spending allocations in your notebook and enter the data there. (Commonly used categories include: housing, transportation, food, basic utilities, communications and entertainment.)  For greater detail, see ClearPoint’s article on the Ideal Spending Plan.
  4. Designate a daily keeper of the receipts and records. Family members working independently can make the process unnecessarily confusing.
  5. Record your income too. You may be making more than you think, so make sure to log any income you receive in the month, from money from a garage sale, dividend check or bonus.
  6. Avoid paying for expensive budgeting programs. Check out free online spending programs or use Excel and create charts and graphs to break down your spending visually.
  7. Track every expenditure. If you don’t get a receipt for something, write down the amount spent, for what and by whom in your notebook.
  8. Schedule a time for recordkeeping. Sort receipts by expense category and add up the totals in each area.  You may be motivated by tracking daily, weekly or just at the end of the month.
  9. Assess your values. Does your spending reinforce your values?  If you are an environmentalist, are you spending too much on gasoline?  If so, you might consider other modes of transportation. Riding a bike, car pooling or taking the bus would not only save money, but better align with your values.  If education for your children is of high importance, are you saving enough to help them attend college?
  10. Examine your expenditures, plot your future and make adjustments. Make this newly-found knowledge work for you.  Set goals for which categories you would like to cut back versus those you want to strengthen.

Are you spending within your income?  Are your needs being met? Are you saving 10-20 percent of your income for retirement and savings? Are you setting aside money for your short- and long-term goals (buying a car, saving for a down payment, replacing your home heating system)?

If not, revise your spending plan. ClearPoint offers help on creating a budget.

Tracking is an essential money management tool and it’s simple.

If you’re having a tough time living on your income and paying off debt, a credit counselor from ClearPoint will help you create a household budget and evaluate the appropriateness of a debt management program.

Call 1.877.412.2227 (CCCS) to schedule a no-cost appointment.