One of the first steps to controlling your money is understanding where it’s going.
It’s important because when you start managing your money intentionally, you start making plans for your money. You start looking ahead and deciding what you want to do with your money before you spend it. And to do this, you have to gain conscious awareness of what you’re doing with your money.
Let me back up a bit and explain myself.
Your habits make all the difference when it comes to your money. Spend all you have for long enough, and you’re broke. Spend more than you have for long enough, and you’re in debt. Save and invest for long enough, and you’re wealthy.
So, whether you’re a saver, a spender, or something in between, rich or broke, you are where you are because you likely repeat certain actions all the time.
When you’re looking to improve your money management skills, you have to be able to start with your habits.
To change your habits, you have to know what you’re doing with your money.
Do you know what your money is doing? Great! You can make a conscious effort to change those habits with time.
Don’t know where your money is going? Do you know you get paid but don’t have anything to show for it? Not so great! You have an opportunity to build awareness / consciousness around your financial habits.
Now that you’re caught up, let’s talk about tracking your spending.
If you spend mindlessly, you need to learn to see those expenditures. You need to bring your mind to your money habits.
To do this, you’re going to create a record of your spending for a certain period of time. I recommend a month. For extra credit, do it for three months so you can get an idea of your spending over time.
Heck, even if you think you have a good handle on your spending… you’d probably be surprised at what you find. How much do you really spend on Amazon? How much on Ubers or Door Dash?
Just to be sure, I don’t think any of these things are wrong or bad. I think you should use these services and spend to your heart’s content if you want. I just want you to be aware of what you’re doing.
Because from awareness and clarity comes actual choice.
Do it because you actually want to, not out of mindlessness.
So. Create a record of your spending for a month or longer. Track everything you spend. Or only what you spend on your bank cards. You can write it down. Or do it via Excel or Google Sheets. I don’t care. What I do care about is that you’re taking time to see your spending habits and to really understand how you’re using your money.
Again, your habits determine your results with your money.
Bring attention to your habits and you will be well on your way to managing your money.