Track Your Spending


In these uncertain economic times, it is especially wise for individuals to have their finances under control. For most, to live within one’s means is to spend less than one takes in. Seems simple enough. Most people know how much money they bring in but not as many know where it is goes. According to a recent survey, fewer than 50 percent of Americans have a budget and one in five don’t have a good idea of how much they spend on housing, food and entertainment.1 It is much easier to control how one spends in comparison to how much one makes.

The first step to controlling your spending is to determine how much you are currently spending. Tracking expenses could be as simple as recording all expenditures in a journal which has a date, amount, establishment, and description of each purchase. Manually tracking expenses on paper may fit the needs of some, but there are software packages out there that will do this much faster and more accurately. 
The different software packages vary from those installed on the computer, such as MS Money or Quicken, to those that are free online and use the cloud, or FinanceWorks. With smart phones becoming more common, using an online service might be more beneficial and convenient as it allows you to enter purchases from the phone as you make them. Otherwise, keep receipts and dedicate a specific day of the week and time to enter them. Keeping a routine will greatly increase the chance of successfully sticking with it as compared to those who enter them from time to time when they remember it. 
Rebecca Cardwell, Director of Community Relations at the UVa Community Credit Union,  suggests you “begin by tracking for three months” which will give a good baseline. She also believes that “commitment is one of the hardest parts” of tracking spending.   Set a goal of three months and provide a small incentive to yourself if you reach it. Understanding where your money is going is the foundation to nearly all other personal financing matters, so it is important you follow through on tracking.
When setting up the software, you have to decide which categories to choose from when assigning expenses. Rebecca Cardwell believes, “start more detailed and then phase to less detail” when it comes to categories and “be sure to separate eating out from eating in.” An example of increasing the detail could be that instead of using the category “transportation” to capture all transportation expenses, break that down further to car loan, car insurance, car maintenance, fuel, transportation, and other. As time goes by, some categories that you find are being used more than others may need to be further broken down while those that go unused can be eliminated.
During the process of tracking their spending, many people are surprised by how much money they spend on certain items. Whether it is what you spend on vending machines, eating out, or iTunes downloads, little charges can add up to serious change. By having details on spending habits, these spending leaks, as Caldwell refers to them, can be identified. Then you can decide if the benefit you are getting is worth the expense. As Rebecca Caldwell says, “it’s all about choices.”
Choosing what categories to spend money on leads into the next financial step, which is establishing a budget. The UVa Community Credit Union provides educational classes to help individuals learn and understand these basic financial skills. With just under 5,000 students going through their educational program last year, it is something to consider if you want to learn more on this topic. The credit union industry lobbied hard for the Virginia educational requirements that all high school diploma recipients be required to take a personal finance class as part of their k-12 education.  While the future generation may have a better understanding of personal finances, it is never too late to learn and help shake off some of those nasty financial habits picked up over the years.
1 The National Foundation for Credit Counseling. (2012) The 2012 Consumer Financial Literacy Survey. Washington, DC: Retrieved from