Recession Buster

Track Your Spending to Stay Above Water

No matter how much you make, it’s virtually impossible to map a more effective strategy for improving your financial picture without a starting place. It’s like wanting to better your credit without knowing your credit score.

Once you discover where you’re spending rather than where you think you’re spending, you can make adjustments, live within your means, and reach your financial goals.

Tracking your spending is a learnable skill. It’s not difficult, but does require that you’re organized and systematic. The financial specialists at our Consumer Credit Counseling Service (CCCS) agency offer the following tips:

How to Track:

• Keep a daily money log for at least a month. Collect every receipt including those from ATM withdrawals, online purchases, automatic charges from your credit cards and monthly bank statements. If you can’t get a receipt, write down your spending transactions. Some find it easiest to take only use the old-fashioned method—jotting down every expense as they made it in a notebook. Doing so eliminates the need to hold on to so many slips of paper. The technology-savvy may prefer using a hand-held computer like a smart cell phone.
• All members of the household need to save and share their receipts. To simplify matters, one person can collect and record the numbers.
• Try not to let the process affect your money habits, just record them. Improvement is only possible if you’re accurate and honest with yourself.
• Determine your spending categories. There is no one way to do so. Categories include groupings for expenses such as childcare, debt repayment, housing, transportation, food, or entertainment. Transportation, for instance, would cover car payments, auto maintenance or repairs, and insurance. For greater detail, see ClearPoint’s article on the Ideal Spending Plan and Consumer Spending.
• Add it up. You may label envelopes for each category, sort your receipts into them, add them up and record the information on paper or spreadsheet. Others just sort the receipts into piles and work from there. From there you can access our budget calculator to help you determine your monthly surplus or deficit.
• Record your income. In addition to expenses, make sure to log any regular and miscellaneous income.
• Assess where you’re spending. How do your expenditures compare with other Americans? (link to: Ideal Spending Plan and Consumer Spending article) Most people who track expenses are surprised by the amounts they’ve spent in several areas. They immediately recognize weaknesses in their cash flow. Does your income more than cover your monthly expenses? Are you saving the widely-recommended 10-20 percent of your income for retirement and savings?
• Decide where to cut back. Determine which costs you can reduce or eliminate so you’ll know how much you can reallocate to other categories more aligned with your goals.
• Create a strategic spending plan. Here’s where awareness of your current habits translate into more effective money management. Set your financial goals and create a budget to reach them. ClearPoint provides instructions for creating a household budget here.
• Follow your plan. A plan without action to back it up won’t do much good. You’ve already invested the time into creating your personalized plan. Most people are disadvantaged by not having this leg-up. Start slowly and evaluate your progress every few weeks. You can then make adjustments accordingly.

Understanding how you spend will provide you with a starting point to develop a financial action plan. Your plan will include a strategy to save more quickly reach your financial goals—be it to pay off debt, build an emergency fund, or buy a car or home.

If you are having difficulty making ends meet or paying off debt, a credit counselor from our Consumer Credit Counseling Service (CCCS) agency can work with you to develop a household budget based on your expenditures. Start your appointment online or call 888-656-CCCS to schedule a no-cost appointment.