Happy New Year! I hope everyone had a great holiday season. This post is one that was inspired by a couple of my readers and one I think we can all relate to. It’s about the importance of tracking your expenses. I’ll be the first to admit that this is one of the things I’ve struggled with the most. We have plenty of things to keep track of in our lives and the last thing we need is to add more.
Here’s the thing though: what you’re spending on has a huge impact on your financial well-being and on your life overall. So whether or not you want to face it and actually track your spending, it’s still impacting you in so many ways. If you’re still thinking of New Year’s Resolutions, I challenge you to add this one to your list. Track. Your. Spending.
A couple of months ago, one of my readers sent me this:
“So recently I put all my miscellaneous expenses into an Excel sheet… It included my Apple Music at $5 per month, Onstar Account at $20 per month, my Fab Fit Fun Box for $200 per year, eyebrows cost $13 per visit, Netflix is $10 per month, and a few other things and I found that I was spending over $1000 per year on all this “little” stuff! That didn’t even include when I get manicures or all the money I spent on coffee! Once I saw it all laid out like that I HAD to make some changes!”
I completely related to her when she sent me this. It’s so easy to swipe your card for a few dollars, or sign up for subscriptions that are just $10 a month and forget about them! Every “little” thing adds up. It just doesn’t feel so bad when it’s a small amount of money until you put it all on a spreadsheet or piece of paper and see how much it actually amounts to.
Tracking your spending isn’t only to see how much you’re spending, but also to make sure you’re not paying for something you didn’t even know you were. Another one of my readers told me that after taking a look at what she was spending on, she found out that she was paying for Spotify twice every month and she had no idea!
Have these stories convinced you to start tracking your spending yet? I hope so because if not, the rest of this post won’t be fun. 😉
How should you start tracking your spending? Here 3 are simple ways:
- Write them down. This is the old school way and a good one if you like writing things out. Simply open up your online banking or take your bank statements out and start writing out your expenses. You can also write your expenses out as they happen. Keep a small notebook or journal in your bag or pocket and write down as you spend. Remember to track every expense, even the ones that seem “small”. This may even help you spend less. There have been studies conducted that show that just knowing that if you buy something you have to write it down, you’re less likely to make those spur-of-the-moment purchases.
- Use a spreadsheet. You can use an Excel Spreadsheet or Google Sheet to input all your expenses to. You can even find a lot of pre-built templates that will not only allow you to track what you’re spending, but also calculate how much money is going in and out of your account.
- Web-based personal financial management services. There are many out there, but I personally like to use Mint.com. Mint is a great tool that allows you to link all your accounts and see them in one place. The best part is that once your accounts are linked, it does the work for you. You don’t need to write anything down or input anything into a sheet, it will automatically aggregate all your spending and have it for you in one place. You can set budgets and also see a breakdown by category or even vendors of where you’re spending your money.
Which of these is the best way to do it? That really depends on you and your preference. The only way to do it wrong, is to not do it all. Will you be tracking your spending in 2019? I know I will.
Nothing on this blog should be considered personal actionable advice, research, or an invitation to buy or sell any securities. Consider all risks before investing, including the loss of your hard earned money. Vee is an Investment Advisor for Warren Street Wealth Advisors, this blog reflects her personal views, and not that of Warren Street.