As we’ve spoken about previously in What’s the Magic Number?, in many ways your spending is key to meeting financial goals or even being able to retire. Does that mean everyone needs a strict budget? Not necessarily. However, I would argue that everyone needs spending awareness.
Before my husband and I purchased a house, I thought it was important for us to sit down and make sure that we had a good understanding of our set monthly expenses as well as our typical discretionary monthly spending so we didn’t over extend ourselves with a monthly payment. With my being a financial planner and my husband being an engineer, a spreadsheet was the obvious solution! Not only did tracking help us understand what was coming in and going out each month, it helped us also see where we were spending more than we thought.
As we head into the new year, make it a priority to bring some awareness to where your dollars end up each month. You might find a subscription you no longer use or realize that more could be allocated to savings than you thought! See what type of tracking schedule you can keep to. We’ve continued to track each month and that works for us. You may find tracking your spending on a different schedule works better for you. The important thing is to bring some awareness to where your money ends up.
Not sure how to get started? Reach out, we can send you a sample tracking spreadsheet for both spending and savings. If spreadsheets aren’t your thing, no problem. We have other ideas for you. Reflect on the things you value and see if they line up with your spending, then we’ll help you create a plan.
Written By Patricia Spies, CFP®