Where Does My Money Go?

Does it seem like your money grows wings and flies away?  You had $100 in your wallet and now you have $5 left.  You got a raise, but where did it go?

It’s time to take control.  A fundamental habit for financial success is knowing exactly where your money goes.  Everyone has a vague idea in their brain, but have you sat down and really added up and categorized your expenses?  It sounds hard, but it isn’t.  There is software out there that can help and you can literally track your money with a touch of a button.  I suggest investing a few dollars and buy Quicken or use Mint.com.

Start tracking your expenses today.  Do it for a month to start.  Categorize and enter in the amounts.  At the end of the month generate a category report and review it.   How much did you spend on items that you really didn’t need, but bought because it “was a good deal?” When you see your income and expenses in black and white on a report you generated, it is impactful.   Don’t stop after a month, keep on going….. get birthdays, holidays, vacations, track it all so you really know,  by aggregating purchases over time, where your money really goes.

Knowing where your money truly goes will empower you to make better choices on how you use your money.  This will help you formulate a spending plan and give you an idea of what your budget truly looks like.  For example, if you are spending $200 a month on cable stations you never watch, call your cable company and cancel them.  If you have little savings, start paying yourself first by establishing a savings account with your bank, or better yet, an online bank.   You may be paying bills automatically, why not pay yourself automatically, too?

As people get raises or bonuses, they naturally spend them without thought.  Just think if you could keep your expenses level as your income rises, how much better off you will be financially!

Previous post:

Next post: