This article is provided and sponsored by:
ClearPoint Credit Counseling Solutions

You’ve heard it over and over again from financial planners, “Track your spending!” Many of us blow off the advice, but as a result we may not manage our money as well as we should.

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Keep in mind that tracking your expenses has some important benefits:

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  • Learn where you’re actually spending rather than where you think you’re spending.
  • Discover areas where you are spending more than you might think.
  • Decide where to cut back.
  • Get control of your money.
  • Evaluate whether your spending is in line with your values.

The consumer credit counselors at ClearPoint Credit Counseling Solutions (CCCS) recommend that those wishing to control their spending start tracking immediately.  They offer the following 10 ways to do so.

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  1. Commit to it. If you don’t believe in the benefits listed above, don’t make the effort. Tracking is tedious and if you’re not motivated, why waste your time?
  2. Choose your method. Some people jot down every expense made throughout their day in a notebook.  Many spend only with cash, save receipts, and tally them at the end of the week. A PDA is most convenient for some while others prefer using post-its or charging everything on a debit or credit card.  Do what works best for you.
  3. Create your spending categories. Again, you have options. The simplest method is separating your documentation into envelopes for specific areas.  Another is creating a basic worksheet on Excel—this is nice because you can easily sum your columns.  If you’re not computer savvy, just create columns for your spending allocations in your notebook and enter the data there. (Commonly used categories include: housing, transportation, food, basic utilities, communications and entertainment).
  4. Designate a daily keeper of the receipts and records. Family members working independently can make the process unnecessarily confusing.
  5. Record your income too. You may be making more than you think, so make sure to log any income you receive in the month, from money from a garage sale, dividend check or bonus.
  6. Avoid paying for expensive budgeting programs. Check out free online spending programs or use Excel and create charts and graphs to break down your spending visually.
  7. Track every expense. If you don’t get a receipt for something, write down the amount spent, for what and by whom in your notebook.
  8. Schedule a time for recordkeeping. Sort receipts by expense category and add up the totals in each area.  You may be motivated by tracking daily, weekly or just at the end of the month.
  9. Assess your values. Does your spending reinforce your values?  If you are an environmentalist, are you spending too much on gasoline?  If so, you might consider other modes of transportation. If education for your children is of high importance, are you saving enough to help them attend college?
  10. Examine your expenditures, plot your future and make adjustments. Make this newly-found knowledge work for you.  Set goals for which categories you would like to cut back.

Put these strategies to work for you, and begin tracking your spending as you work toward your financial goals. For more help with planning and tracking, use ClearPoint’s free budget calculator.