“You must gain control over your money or the lack of it will forever control you.”
—Dave Ramsey
The importance of keeping track of your spending can not be understated. This is step one to understanding how you need to manage your money, and for gaining control over your finances. The beginning is always the most daunting, tedious, intimidating, and intense but, you can decide how complex or simple you would like the process to be. Once you start down this path those feelings of uncertainty, doubt, and ability start to fade and you can start seeing evidence of your work. I can assure you it is worth it.
Those seemingly small expenses can add up to serious overspending issues and budget complications. This is the main point and focus for the "Spending Tracker Challenge" tool. The aim of this is to find out where and when your spending is taking place. This will bring those everyday small purchases to light and may make you see you are spending more than you realize.
“Don’t tell me where your priorities are. Show me where you spend your money and I’ll tell you what they are.” —James W. Frick
We all have our guilty pleasures, whether they be that nice gourmet coffee, a quick drive thru, and even that morning routine stop for gas and whatever else we crave. I know, these are just how we get started in the morning, or just what we do in our morning routine. That is exactly what needs to be uncovered. How much of this do we do without even putting a second thought into it. I know when I started I quickly realized how automatic things had become. I soon realized that these little expenses were not even being accounted for, or if they were they were not accurately represented. This is the exercise where we become very honest with ourselves, as well as a little critical. Maybe your thing is not a morning thing at all but, and afternoon thing. That nice new place for lunch, that quaint little cafe with that specialty you like so much, or that drive thru quick fix to quickly get back to the grind. It's even possible that neither of these are your thing. It's possible you cruise the hottest shopping malls or the hottest stores for the latest craze, gadget, or toy. Maybe it's a night out on the town with friends. Hosting that party, or the weekend gets away. The point here, we all have something that we are too willing to slip under the radar with the thought of, "well it only costs X, it's not that big a deal".
"Rather than saying, 'My checking account is a wreck,' change it to 'I will learn how to track my spending and balance my checkbook.'" - Suze Orman
This simple task alone can help identify spending issues. Can you start to see where yours might be? If you have ever been where I have just days from payday trying to figure out where all that money went, then you too will benefit from this exercise. What I also hope you will gain from this is clarity and alignment with your priorities. Once you can see these items it becomes easier to make the needed changes so that you can start reaching those financial goals. What I want to share with you now are some key points, reasons, explanations, questions, or however you want to label them to provide a bit more cause to this task. I think it is safe to say that we are starting to see the importance of tracking your spending.
Setting goals is the first step in turning the invisible into the visible.
-Tony Robbins
Where is your money going?
I am a stickler for spending along with my values. If you don't know what your daily spending habits look like you are at risk of living above your means.
What am I over spending on?
Have you found you are spending more than expected in areas like dining out, specialty coffees, groceries, or shopping? It is not uncommon to see these issues.
How will you meet your goals?
How could you even know a goal can be reached if you are unaware how your money is spent on a daily basis? You can not remain blissfully ignorant and still expect to hit goals.
It's time to put things in order.
Mindlessly spending on things will not get you to your goals. It's time to put your money where it needs to be.
What spending habits do you see?
Are you starting to see a pattern or a trigger? This reality check can be the intuition needed to correct spending habits.
How is this affecting your bank balance?
Are you spending more than you earn? How close are you to being paycheck to paycheck (If not already)?
Are these your charges?
With keeping track of all your spending you will be able to identify fraudulent charges quickly. This in of itself can be worth the exercise.
It is time to take control!
This effort will give you control over your finances. It will help you curb spending, achieve goals, stop frivolous spending, and keep you focused on your priorities.
What is researched is discovered and revised.
Now that you can see what is happening you can make informed improvements where needed.
It's time to make adjustments!
Seeing how and where your spending is taking place could be the motivation to make real changes, even beyond the small daily expenses.
Still got to take care of me!
This is key, everyone gets it wrong. Doing this exercise is not to constrain you but, to liberate you so you can prioritize spending and make it meaningful.
Need to keep moving forward!
Now that you have seen the full picture and know the areas that are out of control, it's time to reign them in and repurpose those funds for your future. Time to make sure you are not always working.
I hope now you can see how you run out of money before the next pay check or the end of the month. It's very easy to fall into the trappings of living paycheck to paycheck no matter how large or little your income is. I also know like me you are probably thinking you could be doing better all around, you would be right. I know it can be hard during difficult times to make changes but, these are exactly the times we need to implement change. I want you to defy the typical stereotype, individuals that will not have lifestyle purchases steal their money. I want to help fuel a new era of individuals who are not living the standard life, they are living a life of meaning and purpose for themselves with a drive and determination that can not be deterred. I want to help generate an era of financially disciplined individuals, not for the sake of frugality but, for the sake of financial independence.
Do you know that nearly 50% of high income earners are living paycheck to paycheck? Of those polled the biggest issue was financial discipline. This one issue stopped them from achieving their goals. I know this is nothing new, I am pretty sure you have heard it before and we all know the median savings rate hovers right around zero. It does not have to be this way. Put this exercise to use and change these statistics.
This has been a vicious cycle for only a few generations. We can pull ourselves out of this and take back the control. Tracking your spending is your first tool in breaking this cycle. Once you have seen where and what you are spending there is no turning back. Sure you can try to dismiss this exercise but, truth is, you know you will not be the same. You can not unsee what you have seen.
“As soon as we become aware of money, we develop beliefs about it-- beliefs we cling to, sometimes for the rest of our lives, often at the cost of our souls.”
― George Kinder
Here is where your tracking needs to evolve. If you want to make these changes permanent and consistent then use this new found information and create a new budget using our "Building Monthly Budget" Spreadsheet. No, you do not have to start here but, everything is already built in and set up, all you need to do is take your information from this tool and start plugging it into the budget. Tracking your spending goes hand-in-hand with budgeting and the "Building Monthly Budget" Spreadsheet gives you the control and generates a great starting point for getting clarity over your finances.
If nothing else, hopefully I have generated some inspiration for you to start tracking your spending. It is never too late to get started on the road to financial independence and this one seemingly insignificant exercise can help lay the foundation for an amazing future. one more closing note, every aspect of one's spending habits and financial well being is an independent journey and individually set highs and lows. What seems right for one will not be right for someone else. What one considers frivolous one considers essential. There is no right or wrong with this. It comes down to what is right for you and your goals in achieving financial independence.
“A big part of financial freedom is having your heart and mind free from worry about the what-ifs of life.” — Suze Orman
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