Tuesday, October 05, 2010

Money Smart Week: Day 2 -- Track your expenses

The best way to get a handle on how much you spend in a day or month is to track your expenses.  Once you know where your money is going you are better prepared to make decisions to change your spending and saving habits.

Why do I need to track?
  • Reduce daily expenses and impulse buys
  • Analyze financial records
  • Save money
  • Make a budget
Decide how you want to keep a record of your expenses. You can purchase software or use the free Budget Tracker 1.0 download to help you monitor your spending habits. Other options include worksheets, budget planners or a notebook.

Record all income in one section.

Divide your expense section into essential and non-essential categories. Essential expenses consist of money you must spend on required living conditions. Non-essential expenses cover purchases beyond survival needs and may include entertainment or luxury items.

Create subcategories of fixed and variable expenses under the essential category in your notebook. Fixed expenses encompass anything you spend the same amount of money on every month such as insurance, loans, mortgage or rent. Variable expenses fluctuate in price and may include food, utilities and gasoline.

Use monthly credit card statements to help you keep track of your expenses and include this information in your records. These itemized statements can reflect an accurate picture of your spending habits depending on how often you use your credit card.

Keep a record of every transaction you make including small cash purchases on items such as a newspaper or coffee. Save your receipts and enter daily purchases in the appropriate place. The most accurate record provides an account of every penny you spend.

Need help getting started?  Visit the Web sites below for more information, budget and planning worksheets and more.
United Way works to help residents achieve financial stability.  Each day during Money Smart Week check out our blog, Facebook or Twitter to find links and tips about building your savings, sticking to your budget and everyday costs you can reduce.

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