Track your Monthly Spending to Better Manage your Finances

 

Something as simple as tracking how you spend your money can be a tedious task. But tracking your daily spending is essential for building and maintaining a financial budget.  It is also one of the most important first steps to managing your money effectively.

The results of a 2019 survey by the Financial Consumer Agency of Canada found that less than half of all Canadians had a budget. Those who did said following a budget helped them manage their day-to-day finances and debt repayment. Those who did not have a budget said they felt overwhelmed and were more likely to fall behind of their financial commitments.

Tracking your spending will help you avoid problems such as incurring credit card debts, stress and anxiety.  It will also put you on the right track to achieving financial stability.

Take the ‘Track your Daily Spending for a Month’ Challenge

Take the 28-day challenge to tracking your daily spending. For the month of February, make a commitment to record every penny of you spend. Start with the big ticket items like housing, utilities and food, but pay particular attention to your other, discretionary spending. At the end of the month you will have a clear understanding of your spending habits and be in a better position to make changes.

Here are 4 reasons why you should keep track of your spending:

       1. Reduce Impulse Spending – Knowing exactly how much discretionary spending money you have each month will give you more control over your spending habits. If you see something you like, take a pause and evaluate if you can afford to buy it. Ask yourself, could the money be used to  pay down your debt or used to save it for a larger purchase

       2. Make Better Decisions – You will know exactly how much money you need to pay your monthly bills and how much money is left over to spend or save. With this knowledge, you can plan for unexpected events and put away money into an emergency fund

       3. Minimize Stress – Knowing where every penny of your monthly income goes will help you prioritize your spending, avoid late payments, tackle your debts and save for that special purchase. This will minimize stress and anxiety

       4. Improve Financial Discipline – Tracking your spending will make you more disciplined in managing your finances. You will develop the habit of planning and saving which keep you in control of your money.

How to track your spending:

There are several ways to track your spending - each with pros and cons. Evaluate your options and select the one that is best for you.

1.  Go old school and record your spending in a notebook or a printed spreadsheet

This is the most cost effective method as you most likely have paper and a pencil at home.  You just need an envelope to store your receipts and to remember to record your expenses daily.

      2.  Create a spreadsheet on your computer

No need to fumble with a pencil and paper – just input your daily expenses into a spreadsheet on your computer. You can make this spreadsheet sharable with members of your household so each person can input their own expenses into a single document.

       3. Budget Tracking Apps

There are many apps you can download on your phone or tablet which will make it easier to track and record your spending. Every time you make a purchase, just input the amount into the app – it’s that simple. 

While it is tempting to use a budgeting app, be aware there may be concerns around security. Some budgeting apps may require access to your bank account information in order to function properly while others might share your personal data with a third party. 

If you choose this option, then carefully read the terms and conditions of the app to make sure you understand what personal information you provide the app.  If you download a budgeting app you should avoid using public Wi-Fi to protect your banking information. 

For more information please visit the UCU website