Practically every financial adviser, column, article, or blog will tell you that the key to budgeting and spending wisely is to track your spending. It is impossible to know where to cut back if you are not tracking where your money is going. Keeping track of every purchase and categorizing it, however, can be very tedious and it can seem so overwhelming that you just don’t know where to begin. Here are some ideas to help get you started:
- If you like excel and have the time, you can set up a simple spreadsheet to enter each transaction and assign a category. There are also lots of different templates available that you can download. The budgeting app Mint offers a free template as well as Microsoft just to name a couple.
- You can purchase budgeting software such as Quicken.
- You can use a free app such as DollarBird, Fudget, GoodBudget, Mint, or Mvelopes.
- Keep it simple especially when you are just starting out. For example, if you buy food, cleaning supplies, hygiene products, and pet supplies all from one store at the same time, track your spending at each store instead of calculating each separate category from a receipt. As you get a handle on your finances and really want to analyze and trim your spending, you may need to calculate the exact amount for each category but doing so from the start can be too overwhelming.
- Finally, get started! Don’t put it off until next month or the next paycheck. The hardest part of any lifestyle change or project is getting started. So, even if it seems like too much work, start tracking your spending today and you may be surprised at how easy it can be and how much you learn about your spending habits!