Follow Your Funds

There’s always pressure to make changes around the new year. Aside from my annual resolution to exercise more, this year I decided to track of my spending. Unlike exercise, it’s an easy habit to maintain, and like exercise it improves my long term well-being.

The last time that anyone stressed the value of tracking your spending to me was in middle school when we learned about balancing checkbooks. I occasionally started a log in high school but never maintained it. In college, I didn’t even attempt to keep track, I would just periodically check my bank account balance online. As years went by, this system became less and less sustainable.

I decided to make two big changes to the way I spend. 1) I use cash for most of my daily purchases. 2) I record everything I spend. These were very conscious changes aimed to make me aware of my spending because between swiping my card and not recording my purchases, I had no idea where my money was really going.

My paychecks come in direct deposit, so after payday, I use the online portal to transfer money into my savings. Then I go to the bank and withdraw $300.00 to last me two weeks. I use my checking account only for paying bills and buying gas because it’s easier and those are necessary expenses. However, forcing myself to use cash for daily spending slows my spending down because I can actually see the money I’m spending and how much I’ll have left.

Most of the time, that $300.00 lasts me a few days longer than two weeks. I only withdraw more when that cash is gone, and if I have extra funds in my checking account, I’ll transfer most of them to savings. I’ve only been doing this for about a month, but my savings account is already happier because of it.

To keep track of my spending, I bought myself a little memo book ($.88) and I keep it in my bag at all times. It’s easier for me to organize if I color code, so I created a color code for my book.  My four categories - Cash Balance, Account Balance, Cash Spent, Debit Spent - are each a different color. I think better on paper, but if longhand isn’t your style, there are budgeting apps you can use and even an Excel Spreadsheet works. It really doesn’t matter what you use, as long as it’s a system that fits your lifestyle and that you use consistently.

Its best to record a purchase as soon after making it as possible so you don’t forget, but if that’s simply not possible, save the receipt. I usually have to wait until just before work or in the evening before bed to make entries, so I save the receipts in my wallet. Also, because I have a purpose for the receipts, they’ve stopped cluttering my wallet, bag, and coat pockets. I save them long enough to write them down, and then toss them.

At the end of each month, I go through and categorize each expense to fit a budget category (groceries, gas, bills, etc.). I can adjust my budget for accuracy, and this also holds me accountable to my budget. If I spend more on gas this month, I would devote more money to gas in my new budget. But if I overspend on eating out, I know to be more frugal next month.

So far, this has been an easy and beneficial change to my lifestyle. What tracking methods work for you? Let me know in the comments!

Written by Mckenzie Candalot, Staff Writer – Mckenzie Candalot graduated from the College of Idaho with a B.A. in English Literature. She has a passion for written language and helping other women overcome financial hardships. When not blogging or reading, she enjoys cooking and spending time with loved ones.