How much money do you spend every week on coffee from Starbucks? Do you have any idea how much the short stops into the convenience store to purchase a pack of gum are costing you? What about gas – do you know exactly how much money you spend on gas each and every week?
More than half of the population these days is living paycheck to paycheck – often writing checks a day before payday to cover the necessary expenses that they don’t have the money to pay for. It’s one thing to have a budget and to pay your bills on time, but most people don’t really know where the money they earn in their paycheck really goes. This is why it is so important to start tracking your money. In fact, a Money Magazine article stated “the most important first step in setting up a household budget and planning for financial success is to spend 15 days doing nothing but tracking your money!”
And yes, this means every penny of your money. Most people, even those who are paying the bills on time find it surprising to realize just how much they spend on little incidentals such as eating out, or buying gum – or stopping to by a latte on a weekly basis. When you multiply this into a month, or a year – the amount of money that is being ‘wasted’ or spent without thinking can add up to the thousands of dollars.
The best way to track your money is to use a chart that is divided into categories. You should have a category for bills, food, gas, eating out, pocket money, lunch money, etc. Try to be as specific as possible. Then throughout the course of the 15 days, write down the amount of money you spend on a daily basis (down to the penny) in each category. You might find that you are spending more on entertainment or lunches than you are on your grocery budget. When you see exactly where your money went – you can start to formulate a budget and find the areas where you can scale down to save some money each and every week.
Limiting your trips to Starbucks for instance from five to just twice a week can save you close to $40 per month (Or more depending on your indulgences). Bringing your lunch from the groceries at home instead of going out to eat just three times a week can save you close to $100 (or more) each and every month on food. You can also assess different ways to save on monthly expenses such as your Cable television bill or cell phone service. Additionally, if you have been a long-term customer of your electric, phone or cable company – you may qualify for unadvertised discounted rates. Also, calling credit card companies and seeing if you can reduce monthly payments or interest rates can save thousands of dollars over the years. Many contractual companies would rather give you a discounted rate than lose you as a customer, especially if you have been a good customer.
You should also be able to look at your money tracking and find out how much you are spending on needs versus wants. If you like to buy clothes and shoes and realize that in one month, you spent $300 on clothes, you might decide that is too much and an area of spending that you could easily cut back on. Financial experts from Schwab believe that most people have a thwarted opinion of what they ‘need’ versus what they want in their lives. Do you need to buy name brand cheese as opposed to store brand? Do you need the most expensive shampoo that money can buy? Tracking your money and your spending also has a lot to do with paying attention to the things you are purchasing. Before making purchases, ask yourself “Is this something I need – or just something that I want?”
If you need some help with budgeting, tracking your spending, and finding ways to be more cognitive of the where your money is going – you are in luck! There are apps for just that purpose that you can utilize on any of your technological devices.
Here are some of the most popular money saving/tracking/budgeting applications according to Wired dot com, a leading source of technology information.
- iReconcile – This app costs $1.99 per month or $19.99 per year. It comes with a bunch of features that can help you on a daily, weekly, monthly, and even yearly basis.
- xpenditure – This app costs a one-time fee of $1.99. This app is power packed with many options and helps you to stick to a budget.
- MoneyBook – This is another highly functional application that has tons of options and costs only $2.99 from the app store.
- Toshl – This is a free money-tracking tool that is easy to use across devices.
- Mint – Mint has long been considered one of the most highly functional, helpful money tracking and budgeting application available. It is available on both a PC and a smart phone or tablet. The best part about the Mint app, is it is free and enables you to sync all of your accounts so that you have up to the minute records of your money coming in and going out.
When it comes down to it – you work hard for your money. Living paycheck to paycheck may be a reality for you, but there are ways to spend more wisely. The first step is being able to track your money and gain a full understanding of just where you are spending the bulk of your money. Bills are part of life. Too many people feel so strapped financially that they are unable to build a nest egg, even if it is a small one they desire. By being frugal and paying attention to your finances utilizing applications such as these and by remaining conscious of every penny that leaves your pocket – you will become more informed about your finances, and better able to make the most of your hard earned income.