How much do you earn each month? Easy answer, right? But do you also know where it all goes? Once you’ve set goals for your money, it’s time to match what comes in with what goes out. Over the next month, record the purchases you make: both fixed and variable spending. Don’t concern yourself with season expenses right now. Your goal here is to get a handle on your routine spending patterns.


Identify income

Start by making a list of all your household income sources and their amounts. Include everything: net wages, commissions, tips, self–employment income, dividends, pensions, spousal support, child tax benefits, and child support payments. If it’s income it should go on your list.


Track outflows

Spend as you normally would, but record every out-going cent—a bottle of water, a pack of gum, everything. You might be amazed by what you learn about your variable spending patterns. Since many of us don’t already record our spending, you may need to gather this information from bank account or credit card statements, check register books, receipts or bills. Seeing patterns in your spending will help you save in the future. Overspending on food? Think about growing your own veggies or joining a community garden. Dishing out for a major appliance? Consider a floor model and barter for the best price.


Include everyone

Every family experiences spending “leakage,” the little things that aren’t accounted for, but add up. If, for example, you have children, and if you give them an allowance, that counts as an expense. Whoever in your household draws from the family income should be included in this expense tracking exercise.


Be totally honest

Tracking what you buy can be a real eye opener. Sometimes people start feeling a bit embarrassed by the impulsiveness of their spending. If that includes you, you may be tempted to record how you think you should be spending. Resist this temptation. To be useful, your results must accurately reflect your actual spending. You’ll have ample opportunity to correct the error of your ways when you craft an absolutely brilliant budget. When budgeting, try lowering your cash and debit limits on your ATM card to help curb your impulse buying.


Keep it simple

Much of our spending stems from social pressure, ubiquitous advertising, or the assumption that whatever you buy will make us happy. And yet, the pleasure we find in so much of what we purchase fades quickly. So pause before you buy and ask your self if this current temptation is essential to your happiness. If it is, choose another expense you can eliminate to offset this purchase, then go for it. When budgeting, try lowering your cash and debt limits on your ATM card to help curb your impulse buying.


Review your progress

Avoid making this process unnecessarily complicated. There is no need. A notebook and pencil will do. But if spreadsheets thrill you, go for it. And use our budgeting tool for expense tracking - you may see some spending habits you didn't even realize you had.

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