Track Your Spending

How much did you spend on soda, snacks or convenience store items last month?  Chances are you don't have any idea.  Small cash purchases, which seem harmless and insignificant, can bust any budget.  The best way to avoid mindless spending is to track your purchases over a period of time, such as a month.  Keeping track of all purchases - large and small - will provide you with key information and shed light into areas of your budget in which you can improve. It will also give you valuable insight into what your spending weaknesses are and how you can avoid trigger situations.

When tracking your spending, it's important to pick the method that is easiest for you, fits your lifestyle, and one that you can stick to. Think ahead to how you plan on budgeting as certain methods listed below may complement certain budgeting methods better than others.

• Keep a Spending Journal

A spiral notebook that fits in your purse is great for this.  For every item you buy, track the amount spent and to which category it belongs, such as: groceries, gas, entertainment, restaurants, clothing, and so on.

• Save Receipts in an Envelope

This is a really simple way to track spending because it doesn’t require much time.  Simply grab an envelope and make sure that both you and your spouse account for all of your purchases – whether cash or credit – by placing the receipt in an envelope.  If you make any purchases where a receipt isn’t available (vending machines, for example) write the amount spent and the item on the envelope itself.  This works well for spouses who may be less than cooperative.  It isn’t too much to ask them to simply hold onto their receipts.

• Use a Program Like Quicken or Money

This can be done in conjunction with keeping a spending journal or a receipt envelope and works well for those who plan on using a computer program as a part of their budgeting system.  Don’t worry about categorizing the purchases right now.  Simply gathering the information will be sufficient.  After the end of the three weeks, we will begin to categorize your purchases so that you can create a budget.

• Use Online Sites Like Mint.com

If you want to take electronic budgeting one step further, consider an online tracking site like Mint.com.  Not only does Mint use features like Quicken and Money, it connects to your banking/credit card information nightly to automate the process even further.  Best of all, it’s completely free.