Do you know exactly where all of your money goes each month? Do you know how much money you have left to spend this month? Are you saving towards an emergency fund each month? If you answered -NO - to any of these it may be time to get your finances in order.
The first step to saving more efficiently is to keep track of what you spend and budget. There are many different ways to do this, try a few out and choose the system that works best for you. The key to saving more successfully is to find a system that works for you and to stick with it.
Step One: Keep Track of What you Spend
There are many ways to keep track of what you spend. Growing up, I watched my dad put every receipt into a drawer. At the end of the month he would total up the recipes and items from his check book in order to track his spending for the month. Today, we pay for the items we need in many different ways - we spend cash, credit, debit, and we even auto-pay bills. It’s important to have a system in place to capture all this spending.
Luckily, there are digital tools to help you keep track of your spending. Look for free tools that will group all your spending in one place. (Let us know on our Facebook page how you keep track of your spending) Take a look at a couple months of spending. Total up everything you spent and divide your spending into large categories –housing, food, utilities, entertainment, shopping, savings, and everything else. Click here for a sample budget worksheet.
Step Two: Budget
Now you know where your money is actually going. But is it going where it should? Create a budget that you can stick to. Look at places you can cut back in order to pay down high-interest debt and save. Not sure where your money should be going? Try one of these online calculators:
Ideal Budget – CNN Money
Budgeting Calculator – you can deal with it
Step Three: Stick to your Budget
Putting together a budget is easy; The harder part is sticking to it. The key to this is to go back to step one and keep track of your spending. Each week, check your finances to make sure you are staying within your budget. You can do this by using a cash, or envelope system. You can also keep track with a software program, or you can simply use pen and paper to keep track of your spending.
No matter how you do it, it’s important to find a system that works for you and stick to it.
We would love to hear the system you use to budget and track your spending each month. Let us know on our Facebook page.