12 Steps to Financial Wellness Series Step 1: How to Track Your Spending
Are you ready to join us on a journey toward financial wellness?
Each month, Members Choice CU will focus on one step of a financial wellness journey. We’ll tackle the topic in detail and help you learn all you need to know about this step. Follow along, and at the end of the series, you’ll have mastered the tools for a life of financial wellness.
Tracking your spending is the first step toward greater financial awareness and, ultimately, toward financial health. However, mastering this skill is easier said than done. How can you track every dollar you spend when you make multiple purchases each day?
We’ve outlined how to track your spending in 3 easy steps.
1. Choose your tools
Tracing every dollar’s journey isn’t easy, but you can make it quick and straightforward with the right tools. Choose from one of the following money-tracking techniques:
Budgeting apps. If your life happens on your phone, you can download a budgeting app like YNAB or Mint to help you track your spending. Both apps allow you to allocate a specific amount of money for each spending category for each month and will enable you to track your spending with just a few clicks. It’s important to note that YNAB is not a free app but that it may be worth the price for users who want to take on a more active role in their money management.
Spreadsheet. If you like to see everything spelled out clearly, a spreadsheet might be better. You’ll need to record every transaction, but if you prepare the sheet with all the spending categories you think you’ll need, this step shouldn’t take long.
The envelope system. If you’re a big cash spender, consider withdrawing the cash you think you’ll spend in a month (or in a week) and keeping it in an envelope designated for each category. When you need to make a purchase, use money from the envelope.
Receipts. Hold onto every receipt from the purchases you make this month to help you track your spending.
Pencil and paper. Recording each purchase the old-fashioned way can help you make more mindful money choices throughout the day. Keep a steady supply of both writing instruments handy so you never miss a purchase.
2. Review your checking account and credit card statements carefully
Along with one of the tools listed above, you can track your purchases using plastic by reviewing your monthly checking account and credit card information at the end of the month. You may receive these in the mail or access them online by logging into your account and downloading them.
3. Review and categorize your purchases
At the end of the month, use your chosen tool to review all your purchases throughout the month. If you’ve used an app or a spreadsheet, adding your assets to find the total amount of money spent will be simple. The app or spreadsheet may have already helped you divide the money paid into separate categories. Similarly, if you’ve used the envelope system, you should know how much you spent on each purchase this month. However, if you’ve chosen another method to track your spending, you’ll need to crunch some numbers to picture your spending habits accurately.
When completing this step, don’t forget to include any automated payments you may rarely think about, such as subscription fees and insurance premiums.
Tracking your spending and identifying your money drains is the first step toward greater financial awareness and responsibility. Use the tips outlined here to master the skill of tracking your spending successfully.
Whether you need help preparing a new budget, are struggling with debt, or want to repair your credit score, we’re here for you. Take the first step and call us with your questions at 606.329.7876. Members Choice CU offers a free Money Management Program, where you will connect with an expert financial counselor. We’ll help you understand your situation, learn about options, and make a plan to meet your goals. The Members Choice Credit Union Money Management Program is accessible to anyone in our community.