Track Your Spending
So, are you ready to do some serious wealth building? Are you ready to get your hands dirty? As I explained in the introduction of the Exploration of a Debt Free Life Series, first, we are going to track your spending. Yes. Keeping track of every penny you spend. Sounds like a lot of work, doesn’t it? Here’s why you should take the time to do this. Two words. Financial Awareness. If you don’t know where your money is going, how in the world are you going to create a plan for it?
It Helps Set Up Your Budget
To get a really good picture of what you spend your money on, I suggest tracking your spending for an entire month. If you are a debit/ credit card person, this is going to be a lot easier than you think. You can just check your bank statements at the end of the month. Don’t worry about how much you are spending right now. Just continue as you normally do and you will have the opportunity to take a closer look later.
If you are a cash person, just ask for and hold onto all receipts and tally up your totals when you are done. I would designate a spot to put all of those receipts, maybe a basket in or near your command center, to catch them all so at the end of the month, you aren’t digging around in pockets for them. Just make sure while you are out, to grab a receipt. If not, find a place to make a note. Keep a notecard in your purse or car. Or use an app.
Once the month is completed and you have your statement in front of you (either online or on paper), I want you to pile like items together. Grocery receipts in one pile, gas in another, coffee in another, fast food in another, shopping another, et cetera. Then start totaling up those numbers. This might come as a shock if you don’t have any idea how much you are spending.
Coffee Is Life
You may be truly shocked at how much you really spend on grande soy lattes, hot, no foam with a shot of caramel (one full pump. Not two, just one). And you may be relieved that you only spend that much on clothes a month. But this is the foundation of a budget. Right here. This will help you recognize the areas that you may tend to overspend. And this would be the ideal area for the cash system. More on that in a later step.
Build A Strong Foundation
You have to understand that this is the place where the foundation is going to begin. To really track your spending is going to show you that the practices you have put in place are going to need to change. But they may not have to go completely go away. These places where you spend money are just going to be intentional. You want those wonderful cups of joy each morning? Well, give yourself a dollar amount just for coffee. BUT, if you realize that there is something else in your life that is a higher priority, like electricity or retirement, you may have to forgo a couple of those drive-thru trips.
You also have a snapshot of the entire picture in a months time. This time frame will give you a chance to throw all the bills in a basket, too. Or virtual bills if you are anon line kinda gal.
Teamwork Makes The Dream Work!
If you have a partner, make sure you are working on this together. Track your spending as a team. In many situations, one person could have more of a challenge than the other. Do the best you can and express how important this is for you.
After you have completed the month and you have all running totals, you now get to decide what to do with it all. For me, there is a true sense of control in knowing where all my money is. Even though you may not like the numbers, at least you know. And we all know that there is power in knowing.
I really believe that living with truth and intention is the greatest way to live. Money is a really hard concept to come to terms with and when you track your spending, it makes the terms more your own. Stop working for your money and start making your money work for you. You work too hard to be oblivious!