Do you sometimes get to the end of the month and think, "where did all my money go this month?" "What did I even spend it on?" It doesn't feel great and it's so easy to put your head in the sand and keep going into another month, it's happened to us all but it doesn't have to.
We believe money can be a tool to live the life you want...and it can also be easy to spend it on things you don't even realise! Whether your new to budgeting or a seasoned pro, it's essential to know what you want to spend your money on and whether that is what's actually happening.
The key to knowing this is tracking!
Tracking your money is a habit and like any habit, it takes time to build. It might not sounds like the most exciting thing to some of us, but once it becomes part of what you do, it feels great to know that your money is being spent in a way you want it to.
Want to read?
The article below covers everything you need to know as well as some questions to get you thinking.
Prefer to watch a video?
No problem! Watch this 4 minute video where Ed will take you through each of the steps.
How to Track Spending with 3 Effective Methods:
1. Use Budgeting Apps
Utilise budgeting apps like Snoop, YNAB (You Need a Budget), or Emma to track your spending automatically. These apps sync with your bank accounts and credit cards, categorise your transactions, and provide insights into your spending patterns. Set spending limits for different categories and receive alerts when you're close to exceeding them. Pros:
Simple and convenient to use
Can keep it on you at all times so it's easy to update and keep on top of
Take less time than manually tracking bank statements or receipts
Cons:
There are usually free starter versions, but you might need to pay a small monthly fee for the full app
You need access to technology - computer or phone
2. Keep a Spending Journal
For a more hands-on approach, keep a spending journal where you manually record every purchase you make throughout the day. This can be as simple as jotting down expenses in a notebook, using a dedicated app on your phone like Notes etc. or a spreadsheet. Review your journal regularly to see where your money is going and identify any unnecessary or impulse purchases.
Pros:
Simple to use
Might not require access to technology
Can be a very cheap option
Cons:
It's very manual and could take quite a bit of time
If you lose a receipt or forget to note something down, you could lose track of spending
3. Use Cash Envelopes
The cash envelope system involves allocating cash to different spending categories and using physical envelopes to store them. For example, you might have envelopes for groceries, eating out, entertainment, and transport. Once you've spent all the cash in an envelope, you stop spending in that category for the month. This method helps you visualise your spending and prevents overspending in discretionary categories.
Pros:
You can't overspend - once the money is gone it's gone
It will help you visualise your money and could help reduce spending
Cons:
You need to be organised in taking money out of the bank and keeping it on you
Keeping money on your person or in your house might not be a safe option for you
Paying with cash might not always be an option
So now you know 3 effective methods to track your spending, which option will you choose?
Think about your lifestyle, how much time you have and whether you're willing to front up a bit of money for a more convenient option.
The key here is to just get started. It might take a few months to find a flow that works for you, but if you want to feel more confident with your money, it's an empowering step.
If getting started is in your way or your not sure which option could be right for you, book a free 30 minute call with Ed our Head of Coaching to get you on your way.
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