Tracking Your Spending Is Time Well Spent (Pun Intended)!

June 28, 2022

I don’t know about you, but the word “budget” just doesn’t do it for me.  In my mind it suggests belt tightening or something along the lines of calorie counting - no wonder!! Now that I’ve planted that vision in your mind, how about we replace that B word with “spending plan?”  Doesn’t that sound better?  

Checking the daily account balance in your bank account will tell you only where you stand on that day.  If you are to know in a given month whether you are spending more of your income to meet your expenses or if you have to pay a bill late or use a credit card to fill in the cracks, then it’s time to take a closer look.  The phrase “cash flow” is commonly used to describe this ebb and flow of income and expenses into and out of bank accounts.   

I know it may seem like drudgery to track your spending.  Once you get the basics down it’s really rather simple.  In most cases fixed costs like rent/mortgage, utilities, internet, and phone are roughly the same each month, so that’s one and done.  There are many apps (suggestions below) that streamline the process for you when you link your bank account or your bank may offer a similar service on their app or website.

So why track your spending in the first place?  Here are the benefits and some examples to consider:

To Know Where Your Money is Going 

Dining out or ordering in can be a major hit to spending.  I’m not just talking about your favorite latte.  Lunches that used to cost $7-$10 are now upwards of $12-18, and higher yet for evening meals.  When you add up these meals over a month, you may be shocked!  

Food is just one area to note.  With inflation at its highest levels in decades, we are seeing that costs and services across the board are taking a bigger bite out of our wallets.  The one thing you can control is your spending and there are plenty of creative ways to do just that!  Cutting back on short-term spending will help you stay on track with your long-term financial goals.

Help You Save More Toward Your Financial Goals  

Speaking of goals, think about a new home or car, holiday gifts, travel, retirement, relocation costs, or FILL IN THE BLANK!  Write them down or have fun (why not?) creating a vision board. 

There is no time like the present to set aside money diligently and regularly toward your goals. Suppose you are planning a trip 6 months  from now and estimate the cost at $1000.  Dividing $1000 by 6  is $167, the amount per month you’ll need to set aside (preferably in a separate bank account).  Can you work this number painlessly into your spending plan or will you need to cut back on other expenses to meet this $1000 goal?   If yes, proceed!  If not, get real and adjust the time frame and/or the amount.  This process is also known as SMART goal setting in that the goal checks all of these boxes:

Specific - how much, how often, start date, end date

Measureable - are you tracking your progress along the way toward the goal?

Achievable - can you reach your goal by the finish line or are you setting yourself up for failure?

Realistic - is the time frame doable or are adjustments needed?

Timely - are you meeting your weekly or monthly target toward your goal?

Wake Up Call on Spending Issues 

Do you have a closetful or roomful of (fill in the blank) that you never use or wear just taking up space?  Do you head to the nearest mall for some retail therapy after a bad day or if you're bored?  

Overspending is a widespread issue that prevents you from saving toward your goals if you don’t hold yourself accountable. Consider putting away those credit cards and use cash instead, or give yourself a monthly spending limit for certain  “can’t live without” items that fall within the scope of your overall spending plan.  Plan ahead, make a list and stick to it!  Be mindful of what triggers your impulses to spend so you can move those to the back of the line.  

It Creates Discipline To Live Within Your Means 

We may not always be in complete control of how much we earn, but we can control how we spend or save.  It is this control that will give you freedom to live life according to your beliefs and values.  I like to call this “putting money where your heart is.”   Plus, there are countless options to increase your income by getting a higher paying position, a part-time or weekend job, starting a home-based business with low start-up costs, selling or consigning unwanted items, the list goes on.  

Don’t beat yourself up if you occasionally overspend.  It happens, so review your spending plan weekly at first to keep the guard rails on, then monthly going forward.  You will build confidence along the way by being the CEO of your finances!

Get Organized

A calendar is a big help so you can write down the dates your bills are due.  This visual will alert you to weeks when you have multiple bills to pay that will take a larger bite out of your cash flow.  

Ways to Track Spending

  1. Good Old Paper, Pencil & Calculator 
  2. Computer spreadsheet (there are many online templates)
  3. The envelope/cash system 
  4. Top Free Smartphone apps (I don’t endorse any of these; they show up at the top of many online searches)
  • Mint
  • PocketGuard 
  • Goodbudget

Once you get in the habit of tracking your spending toward your goals, your confidence will grow and you will breathe a big sigh of relief!  You'll feel as though a ton of bricks has been lifted off your shoulders.

Remember to include savings toward an emergency fund for all of those “uh oh’s” that show up out of nowhere because life happens.