![]() Now that you know where you’ve been putting your money, maybe you need some help figuring out where it should be going. The downside: Tracking software tends to be backward-looking, tracking what you’ve already spent, which won’t help prevent overspending.Īm I saving enough? Where can I cut back? Some credit card providers also offer breakdowns of your spending to give you a sense of where your money is going, but they’re usually limited to transactions you made with that account. These tools work best if almost all of your spending is done through credit cards and electronic purchases. Various apps and websites like Mint or PocketGuard will sync with your accounts to create spending reports. If pen and paper aren’t your thing, or you’re just not diligent enough to keep up with all your purchases by hand, technology can help track and categorize your spending for you. The downside: This method can be time-consuming and can feel tedious. She places a “C” next to expenditures that are a choice (and are the easiest to cut back on, like eating out or entertainment). To help categorize spending, Aliche places a “B” next to any bills that are fixed like rent or mortgage payments, and a “UB” for “usage bills” is placed on expenses that can fluctuate, like utility bills. At the end of the month, you will have a line-by-line accounting of your finances giving you a clear picture of how much you are spending and saving. The key is to be honest and thorough with your tracking – yes, that cup of coffee needs to be noted. Whether it’s with pen and paper or an Excel spreadsheet, tracking all your spending and incoming cash for at least a month provides a detailed log of your financial habits and makes you more aware of them. Just find a method that works best for you. “Your budget creates an environment to have the things you want in a way that is sustainable,” she said.Īnd creating a system to track your expenses doesn’t have to feel like a chore. Taking an ad hoc approach to budgeting can leave you in the hole at the end of the month, shortchanging your savings and pushing you into debt.īut don’t think of a budget as a burden, recommended Tiffany Aliche, founder of personal finance website The Budgetnista and author of upcoming book “Get Good with Money.” Instead, think of it as a way to achieve your financial goals. “People think they are spending less than they actually are,” said Madison Sharick, manager of financial planning at PNC Investments. No one loves hearing the dreaded ‘B’ word, but keeping a running tab of your daily expenses in your head probably isn’t cutting it. When it comes to managing your finances, you need to know where your money is going.
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