It seems like you never have enough money. You get to the end of the week (or fortnight or month) and you are hanging out to get paid again.
I think most of us are living from pay-to-pay or have done so at some point in the past. I know I have.
We try not too, but mortgage, rent, bills, school payments, rates – they all seem to come up just when we least want them to. And that leaves us relying on credit or eating like a pouper until the next pay day.
There is a way out of this though and that is through budgeting. Budgeting is important because it allows you to see where your money is going and control what goes where.
I will not go into budgets in this post however, instead I will let you know about one thing you can do to make your budget a little better and save money at the same time.
Tracking Your Spending Habits
To create a great budget that suits you, you need to know your spending habits. There is no point budgeting $50 on food per week if you spend twice that, or putting aside $100 for the car payment when it is $120 – it’s not accurate and it will leave you short.
To really get to know your spending habits you need to keep track of them.
I can hear the groans from here. Okay, you don’t have to do this forever (unless you want to), but you will need to do it for at least 2 weeks. I did this for 3 weeks and it showed me exactly where I was bleeding cash, allowing me to plug the hole and save much more.
The Easiest Way
There are a few different ways you can keep track of what you spend but I find the easiest way for me is to keep pen and paper with me everywhere I go and write down what I spend money on each time I spend it. Keeping this in your wallet or purse is a good idea.
Other Ways
Other ways of keeping track of your purchases is by keeping all your receipts, using Excel or similar spreadsheets, or using online software.
Be Accurate
Which ever way you choose to keep track of what you spend you need to be as accuarate as you possibly can. Write down everything you spend money on. Even if it is $2 to a charity money collector on the street. It all adds up.
At The End
At the end of the two weeks (or whatever period you choose for yourself) collect all your data together and total it up. If you are anything like me, you may be more than a little shocked at how much money you truly spend.
Categorize
Next, create categories for what you spent money on. These can be whatever you like but the more detailed they are the more you will get out of this exercise. But try not to obsess over this, as there is no right or wrong answer.
Example Categories: Groceries, Petrol, Coffees, Lunches, Electricity, Travel, Rent, Random Food Items, Toll Fees, Bank Charges, Club Memberships, Donations, Work Function. These are just a few of the myriad of categories you could have.
Write your categories down and then place each item and the cost under one of these categories. Then total them up. You will start to see a pattern emerging pretty quickly of where you spend most of your money.
When I did this, my biggest spend by far was on food. So I cut back and stopped spending as much as I had been. I was surprised by how much I saved once I did this.
Once you have done this you will be in a better place to draw up a budget and know where you can easily cut back and save some extra money.
It might be a good idea to do this every so often as we can all easily fall back into bad habits from time to time.
Have you ever tracked what you spend your money on?
Image Credit: woodleywonderworks
Author Info
This article was written by Russ – the founder of MonoMoney.com and total geek. Feel free to contact him via this website and let him know how well he is doing. Or just leave a comment below.
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