Tracking Your Expenses
The first step to getting your finances under control is to find out what you spend. Until you know just how you are currently spending your money, it is difficult to know if you even need to make changes in your spending habits. Keeping track of your spending as the money goes out is the best way to get a realistic picture of your current spending patterns. This does not need to be a lifetime commitment to record where every penny is being spent. Rather, keep track of your spending for a two or three month time period. This will provide insight about how money may be leaking out of your household in ways you might want to change.
The best way to track your spending is to do it on paper or on the computer. Write down each expenditure. Keep your system simple. Anyone in the family who spends money from the household income should be encouraged to keep track of what he or she spends. You can provide each spender with a small pocket notebook for recording or you might post a household account sheet in some central location and have family members record spending at the end of each day. If you have access to a computer and a financial record keeping program, family members may find it more interesting (almost fun) to record their spending on the computer.
At the end of the month, add up the family’s spending by category. It can be quite an insight to see just how much money is being spent in a category such as food when you record money spent at the grocery store, in eating out, for school lunches, in vending machines, and for snacks. Once the family sees where their money is going, they can tell if they need to make changes, and if so where these changes can best be made.