Tracking your spending is the first step toward greater financial awareness and overall financial health. But, mastering this skill is easier said than done. How can you track every dollar spent when you make multiple daily purchases?
We’ve outlined how to track spending in three easy steps:
- Choose your tools
Tracing every dollar’s journey isn’t easy, but the right tools can make it quick and simple. Choose from one of the following money-tracking techniques:
- Budgeting apps – Download a budgeting app to help track spending. These apps allow you to allocate a specific monthly amount of money for each spending category and track spending with just a few clicks.
- Spreadsheet – If you like to see everything spelled out clearly, a spreadsheet might be a good choice. You’ll need to record every transaction, but if you prepare the sheet with all the spending categories you’ll need, it shouldn’t take long.
- The envelope system – If you’re a big cash spender, consider withdrawing the cash you’ll spend in a month and keep it in an envelope for each category. When you need to make a purchase, just use money from the envelope.
- Receipts – Hold onto every receipt from purchases this month to help track spending.
- Pencil and paper – Recording each purchase the old-fashioned way can help you make more mindful money choices throughout the day.
- Review your checking account and credit card statements carefully
Along with one of the tools listed above, track the purchases you make with plastic by reviewing monthly checking account and credit card statements. Access these online by logging into your account and downloading.
- Review and categorize purchases
At the end of the month, use your chosen tool to review all the purchases made throughout the month. When completing this step, don’t forget to include any automated payments you rarely think about, such as subscription fees and insurance premiums.
Use the tips outlined here to successfully master the skill of tracking your spending. Check back next month for step two in the 12 steps to financial wellness.