There are numerous resources available now in our day and age to track your spending; however, it seems to be a difficult task for many people. Most individuals simply spend until they run out of cash. It is a concrete fact that the first step to practical financial management is keeping record of your spending and controlling it. As soon as you track your spending, you are able to see where your money goes.
Tracking Finances for the Technology Minded
If you have a computer, you can track your spending electronically by creating your own expense sheets and tracking system. There are also good financial software programs to buy that not only track your spending but also assist you with printing checks, balancing your checking account, providing charts to help you assess your financial situation and many more. These programs are simple to use and consume little time and are offered by software companies for a reasonable price
A good way to find out where your money goes after you get it out of the ATM, is keeping all your receipts for two to four weeks and keeping a log of all other money spent without a receipt. Make sure to get a receipt for all your expenditures as they are available with most purchases and label them by expense category. On monthly basis, add up the amount in each expense category and keep record of the total on a notepad and compare how each month your expenditure for that category is up or down. Gather the receipts in a drawer in your kitchen or any place you find convenient and don’t forget to involve every member in your family. This will help you find out if you are spending money on items that are important to you, or if you are just spending randomly. It is very important to get your expenses and income on paper to see how you are using and managing your money.
The Envelope Strategy!
If you tend to overspend, keep record of your finances by putting sums of money in envelopes corresponding to your budget categories such as food, clothing, entertainment…etc. For example, if your budget for clothes shopping is 550 Dirhams monthly (lets assume for men that it is for entertainment purposes), spend with money from the ‘clothing/entertainment’ envelope. Every time you take cash from the envelope, replace it with the purchase receipt to evaluate your spending. When the money runs out, spend NO MORE!
Keeping record of income and bills
To track regular payments, get a large-size calendar and write on it the income you receive as well as due bills and expenses. Cross off each bill from the calendar when you pay it. You can also use this method for irregular non-monthly payments such as gifts, insurance, taxes…etc.
Always apply the KISS strategy in tracking your spending (Keep it simple and stupid) and avoid unneeded details. It would help if you put a member of your family in charge of tracking all family spending as well as setting a fixed date for recordkeeping. Any method you may use will not be of benefit if you don’t analyze your spending behavior. You need to check if you listed all your expenditures and if they were within your income. The whole purpose of tracking your spending is to bring financial satisfaction and comfort to you and your family, help you live within your income, and eventually help you in realizing your financial goals.