Track Money Going Out
Analyzing your budget helps you develop a healthy relationship with your money and understand the difference between your needs and your wants. Becoming financially secure involves mindfulness of your expenditures and requires intentionality with each and every transaction that you make. The world around us is set up so that we are led to believe that companies care about our convenience. In reality, they want to make it as quick and easy as possible to separate us from our money with little or no thought.
A swipe here, a tap there, auto-checkout a few times, and BOOM, all of a sudden, your budget is out of whack, and you've used your credit card more than you wanted to. Spend some time on this Needs vs. Wants Worksheet Download Needs vs. Wants Worksheet Download Needs vs. Wants Worksheet Download Needs vs. Wants Worksheet help you decide what matters most while tracking your money going out.
Why is tracking expenses essential?
Tracking your expenses is an easy way to identify spending leaks and habits which can be used to find what drives your spending decisions. Understanding why and how you spend money on things can help you start to become more aware of your spending behaviors and how to change them.
Tracking your Expenses
There are different ways that you can go about tracking your expenses. Looking through the pros and cons of each of the different tracking methods will help you find the one that works for you. Budgeting is personal- what will work for your friend may not work for you and vice versa.
Good ol' Pencil and Paper
Bullet Journal
Finance Journals
Regular Pen and Paper
Digitized Budgeting
Budgeting Apps (Mint, GoodBudget, EveryDollar, etc.)
Excel/Google Sheets
Breaking it down into steps:
Step 1: Write or record all your expenses for a set length of time (30, 60, 90 days)
Step 2: Categorize your expenses (Groceries, Take Out/Eating Out, Rent, Personal Care, Pets, etc.)
- Bonus points if you also categorize each expense as Needs/Wants
Step 3: Identify trends and patterns in spending
- You can total each category and see where you spend the most money
Analyzing your Expenses:
Looking over the different categories, you can reflect and ask yourself some of these questions.
- Did you spend more in one area over another?
- Follow up: Once you identify the category you spent the most. Ask yourself why you might have spent so much in the one category and if it's possible to reduce spending in that area.
- Was there a category that you spent more than you thought?
- Follow up: When looking through that category, ask yourself why you might have bought/spent that money and think of alternatives or other ways you might be able to cut back.
- Ex. Peter was surprised that he spent over $150 on food delivery last month. He starts to think of ways to cut down on the cost and decides that he can save on the delivery/service fee if he were to pick up the food himself.
- Follow up: When looking through that category, ask yourself why you might have bought/spent that money and think of alternatives or other ways you might be able to cut back.
- Was there a category you were surprised that had expenses?
- Follow up: take note of the expense and remember it for when you decide to set up an emergency fund.
- Ex. Davy forgot that they had to get their computer fixed and needed to get a new part for it.
- Follow up: take note of the expense and remember it for when you decide to set up an emergency fund.
Being aware of where and what makes us spend money can be a great step towards being financially secure. Remember, ANY step(s) you make towards your financial goals is a step closer to being financially fit!
Learning Checkpoint:
Optional Activity: Spending Detective Worksheet.pdf Download Spending Detective Worksheet.pdf