Living paycheck to paycheck and wondering where all your money goes? Do you feel like you make quite a bit of money but still run out by the end of the month? For the next 30 days, your challenge will be tracking your monthly income and expenses. Every single cent!
How much are you really spending?
You probably have a ballpark figure about how much your fixed expenses are: mortgage/rent, car payments, insurance, utility bills, student loans, daycare, etc. These typically don’t fluctuate too much month to month, although utilities may depending on the time of year.
The variable expenses are where it can get tricky to realize how much your are spending unless you track it for awhile. You may think you are spending less (or more) than you actually are! Expenses here would be groceries, entertainment, clothing, restaurants, home furnishings, etc.
What should I keep track of?
The first thing you’ll want to track is your income. How much money are your bringing in every month? You’ll want to use your take home pay- not your hourly pay times 40 hours and not your annual salary divided by 12. You need to know how much money you have readily available to use!
Second document all of your expenses. Add up everything! Whether they are paid with cash, credit card, or automatically deducted out of your bank account, account for all spending this month!
Pull this information from:
1. paycheck stubs
2. cash receipts
3. credit card statements
4. bank statements
5. monthly bills
Group your expenses into categories as you add them up to get a real picture of where your money is going. Here are the catergories I use, yours will be different as everyone has different circumstances and are in different life stages!
- auto: insurance, payment, gas & fuel
- internet
- cell phone
- utilities
- tv (Netflix & Hulu)
- groceries
- gifts and donations
- health insurance
- home improvement
- mortgage
- kids/school activities
- property tax
- misc expenses
- everything else
What method should I use?
There are three basic ways to log your expenses.
1. On paper. This would work well if you don’t have many transactions per month, otherwise could become pretty time-consuming.
2 With a computer spreadsheet. Google Sheets or Microsoft Excel work well.
3. With an app/website. This is the easiest way and the method I use.
My favorite app to use is Mint.com (found here in the app store and here on Google Play). Mint.com allows you to sync your bank and credit card information right to the app. It automatically keeps track of your spending and divides your expenses into categories. You will have to log cash expenses and any bank accounts that are unable to connect to mint.com. If you have a lot of transactions per month, this is the way to go! Mint.com is powered by Intuit (the company that makes quickbooks and turbotax). And the best part is- its FREE!
Tips
Track as you go- sit down weekly to add up your spending so it isn’t overwhelming at the end of the month.
If you have all your records, you could actually go back and look at last month’s spending if you want to skip ahead to the next part of this challenge, which is budgeting! (More on this later)
If you love using an app to keep track of your spending, try to use less cash so you don’t have to manually enter these transactions. Just be careful with this though, using a credit card can cause some people to spend more carelessly!
After the challenge
Now that you know where your money is going, you have some decisions to make. You can continue to live paycheck to paycheck or you can take control of your spending! Look at the categories. Which numbers surprised you the most? If you want to change your spending habits, use the knowledge you’ve gained from this challenge and move on to the next step in this process… making a budget!
Let me know if you have any questions, comments, or insights you’ve gained from doing this challenge!
