Can you account for every dollar you earn? In other words, do you know exactly where each one is spent or are you the woman who always wonders where your money goes because you don’t seem to have anything to show for it?
If you aren’t tracking your expenses, you’re likely wasting a lot of money without even realizing it.
Dollars come, dollars go
It’s easy enough to stop at a gourmet coffee place on your way to work and get a cup of piping hot coffee to help you start your day.
You take your work break and run to a convenience store and purchase a drink or maybe you’ll just hit the vending machine in the basement and grab a snack to tide you over until dinner. Run errands after work and you can get extremely hungry so why not run through a fast food drive thru and grab your dinner there?
This is all great until you get home and realize that your cash is gone and you’re wondering how it happened. You’re sure you left home that morning with a $20 bill in your wallet and now all you have is some change.
Why? Because you weren’t tracking your expenses, which makes it awful hard to figure out where your money is going – and extremely hard to save.
When you know where each and every dollar of your paycheck is being spent, you can easily figure out the areas of your finances that are your biggest money thieves. You’ll be able to discover where the largest amount of cash is being needlessly spent so you’ll know where to make changes.
This allows you to finally fill that piggy bank that has been doing nothing more than collecting dust on your dresser.
How do you track your expenses so that you can save cash?
Although figuring out where your money is going isn’t difficult, it does take time and, above all, awareness. You have to tune into your money and watch it the same way you do a two year old who wants to get into everything. The best way to do this is to take a full week and see where your money goes.
On a piece of paper, put the categories where you believe you spend the most money (such as eating out, morning coffees, etc.). Every time you spend money during the course of the week, write it down. Log what you bought and the exact amount you paid for it (you may have to add some categories if your purchase doesn’t fit into one you’ve already written down).
You’re not trying to change any behaviors just yet; all you’re trying to do is bring awareness to where your money is going.
At the end of the week, add up how much you spent in each category. You may be surprised as to how much you’re money you’re wasting which could be the wakeup call you need to start making changes, which is the next step…
Use your tracking calculations to develop a plan
Now that you have an honest awareness as to where your paychecks are being spent, it’s time to put your tracking findings to work in a way that lets you save money every week. This is where your hard work starts to pay off via a piggy bank that is fed well and pleasantly full.
Start with the category that has the highest amount of money being spent in it and look for ways to lower that amount. For example, if you’re spending $4-$5 on coffee every morning, you could take your own in a travel mug and save $16-$20 by the end of the week in java alone.
If you grab a soda from the machine at work every afternoon for $2, you can get a 6-pack from the store for the price of two beverages, giving you four extra days of drinks for the same price.
Make a game of it and see how much you can save at the end of the week. Keep track of your expenses as you go and you’ll realize how much less you’re spending now. This will keep you motivated to closely watch where you throw your hard earned money.
Knowing where your income is being spent is the first step to putting yourself in a position to save. After all, you cannot find a solution until you isolate the problem. Now that you know, it’s time to close your financial holes and fill that piggy bank!
Add Comment