Today’s Daily Money Tip is about expense tracking. If you want to save money, you need to know exactly how much you spend every month. While you may have a budget or a good idea how much you spend, only tracking your expenses will give you a realistic picture of where your money is going every month.
Why is it so important to go through the exercise of tracking our expenses for at least one month? Because when it comes to spending money we tend to underestimate. Yeah, chances are very very good you are spending much more money on your everyday expenses than you think.
Tracking expenses is very easy actually, and not as time consuming as many may think. You can track them on a notebook, Excel spreadsheet or you can use a FREE program like Mint that will pull your banking activity and make the tracking easier. But basically all you have to do is write down how much money you spent and on what every day, for one month. Break it down in categories like housing, groceries, eating out, clothes, extra curricular activities, etc. At the end of the month add up the category and get the true picture of where your money is going.
This is a great exercise to identify budget leaks, like maybe too much eating out or too many extra curricular activities and fees. This will also show you areas that need trimming, like maybe too many visits to Starbucks and show you areas that need more of your money like house maintenance.
One thing tracking your expenses will give you is a clearer picture of your current financial situation and that’s the best starting point.
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