Cashflow – Tracking your Money

One of the hardest things for me to do since I started this blog and within the concept of keeping my finances under control has been to keep track of exactly where my money is going. Inevitably I forget about spending money or things like smokes, food, and even small snacks I get every now and then. Unfortunately to keep everything as accurate as possible you need to keep these items tracked. The reason all these small items are so crucial is the fact that all of these small insignificant amounts really add up quickly.

For example if you forget to include your bank fees and ATM fees it’ll add up. My monthly bank fees amount to about $12 which is a bit ridiculous, but that’s a completely different issue, and say I don’t include $10 in ATM fees every month this adds up to $22. Normally this $22 isn’t a great deal of money but over the course of a year these forgotten fees add up to $264! If you completely ignore this amount you can’t plan for it or worse still see this as a potential item to bring your cashflow in line.

As part of this months goals I wanted to get a good handle on tracking where every penny has gone and for the most part I’ve been successful. I’m sure there are a few items that inevitably got missed but it’s a lot more accurate than it has been in the past. Here are a few things I did this month to track my spending in minute detail:

  1. Ask for Receipts
  2. Update your spending/tracking sheet daily
  3. If there is no receipt write it down
  4. Go back through bank records to double check things like fees

The whole purpose of having this accurate accounting for where I spend my money is going to be important in the next day or two as I come up with my budget for next month. I used to calculate my budget on a pay-to-pay basis but I’m shifting to a monthly budgeting since a lot of bills are monthly and can be overlooked or forgotten at budget time otherwise. Once you have a couple months of detailed spending numbers you can really see trends in how you spend and what you can do to adjust your spending to be more in line with the money you have coming in.

Remember this might be a difficult task at first but it’s a habit that you need to get into at least initially. Why do I say initially? Very simply once this becomes a habit you’ll not even notice it and once you’ve started accounting for all of the really minor items your budgets will be more accurate. I still think you’ll need to track the details but if your spending is under control you can simply allot a certain amount per month for the minor things and be confident that’s where the money is going. It might take me a while to get to that point but cashflow is extremely important in your budgeting and unless you’re living way below your means every penny counts.

[tags]cashflow, tracking spending, budgeting[/tags]

2 thoughts on “Cashflow – Tracking your Money”

  1. Hello Matt,

    Good Tip regarding tracking one’s spending habit on insignificant items that dent a significant blow to our monthly budget. I’ve been having the same problems in tracking my daily expenses. Three days ago, I started to write down every item I spend money on during work hours and outside work hours to track the item I was spending more money on. Great Article

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