Have you ever had your checking account hit zero before your next paycheck hits the bank? You’re not alone. According to a recent survey by Bankrate, 76% of Americans had less than 6 months of emergency savings available.
Having six months of savings available isn’t an easy feat. You can get there with some effort and trust me, the financial security feels amazing.
Don’t know how to get there? Don’t worry, taking control of your money starts with one simple task.
Start Tracking Your Spending Today
Tracking your spending is the first step to taking control of your money. Once you have complete knowledge of your spending situation, then you can start working toward having the 6 months of emergency savings goal. You have to start with small steps before you can take big steps.
Tracking your spending can be difficult for people for many different reasons. Some don’t like what they see when they track their spending. It gives them the knowledge of knowing what they truly spend their money on, which can be shocking and down right disgusting for some people.
However, it is extremely important that you face the music, track your spending and then take a hard look at where your money goes.
Ways To Track Your Spending
Tracking your spending is a lot easier than many people think. The old fashioned way of tracking spending is a bit more time intensive, but works better for many people. To track your spending the old fashioned way, simply keep a receipt for every single purchase you make. If you don’t get a receipt, make one for yourself.
When you get home, put all of your receipts in a predetermined area. Once a week or once a month, whatever works best for you, take all of the receipts, categorize them and total up your spending.
Technology Saves The Day
If the old fashioned way sounds way too hard for you, don’t worry. Thanks to technology, tracking spending is easier than ever! In fact, there are many options you can use to track your money. The key to never needing to keep a receipt to track your money is to NEVER spend cash.
If you can’t spend cash, how can you spend money? The simple answer is to only use your debit card or credit card (but only if you pay it off in full every month) for everything. If there are any expenses you have to pay that won’t take a debit or credit card, make sure to write a check with a carbon copy and what you spent it on in the memo line so you don’t have to keep a receipt.
Once you have all of your spending on a debit or credit card you can download your transactions from your bank to many different types of software such as Quicken or Mint.com. These software packages will automatically categorize your spending for you. You might have to choose a category for some of the more obscure purchases, but this method is the least time intensive by far.
After You Track Your Spending… Now What?
Tracking your spending isn’t just a one month process. In fact, I’ve been tracking my spending since my first job and will likely continue to do so until the day I die! Having the data on what you spend your money on will provide a ton of value for you in the future.
Once you have a month or two of spending tracked and categorized, you’re ready to move onto the next step. Evaluating your goals and priorities in your life!
Do you know someone who needs some help with their money? Casually tell them that you just read this awesome post and send them over here. It might change their financial life!
Do you track your spending? If so, what system do you use and how does it work out for you?