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I blog a lot about household stuff – laundry, chores, how I try to be a good mom – but one of my favorite things to talk about is money and how to manage it. That’s why I’m writing today to encourage, no urge, you to take this one step (if you don’t already).
Everyone (and I mean everyone) should be tracking where their money goes. No exceptions, no excuses!
Unless you have more money than you need or want, tracking how and where you spend your money is essential.
What is the key reason to track your spending?
Knowledge is power, people!
Be brave. If you’re interested in making your money stretch farther (and who isn’t?), you’ve first got to know what you’re doing with it before you can make any real improvements. How can you resolve to attack that cell phone bill or switch to a lower rate credit card if you don’t know how much you’re spending there in the first place?
Maybe you’ll be pleasantly surprised by your frugality at the grocery store, but you discover you’re wasting an extra $30 a month in library fees. Ahem. Not that I would ever do that…
When deciding how to track your expenses, you have several options:
- low-tech – jot down purchases in a small notebook in your pocket
- software such as Quicken or You Need a Budget (affectionately known as YNAB).
- budgeting websites like Mint.com
- charge everything to one credit card (if you have a great rewards card)
- cash envelope system This won’t really tell you specifically where you’re spending your money, but it will easily tell you how much goes to each category.
One more option: keep your receipts and tally them up at the end of the month. I have two words for this option: bad idea! Please do not think you can hang on to receipts and random notes to yourself and use this to keep track of your expenses!
Call me a budgeting bully, but if you try to do this, I promise you, you will do one of the following:
- You’ll forget to do it at all.
- When you sit down to do it, there are so many receipts, tallying them is way too much of a chore.
- You’ll probably lose a good portion of your receipts.
- If you manage to get through one month, you’ll lose momentum shortly thereafter if it’s not a more frequent habit.
Entering purchases daily or every few days using whatever system you choose is much easier to maintain than waiting until month end.
My YNAB Review
My money management choice for the last 3 years has been an application called You Need a Budget (YNAB).
How do I use YNAB to track our spending?
Most bills are on auto-pay – I have reminders in YNAB for these and approve them a couple times a week when I balance our accounts. I do this at least once a week.
We use the YNAB smart-phone apps (see below) when we’re on the go to record any purchases right away. This is a new habit for us. (I love my $10 phone plan.)
I love that I can take a few seconds to enter a purchase rather than having a pile of entries to make later on in the week. In YNAB it’s just a few clicks. It syncs up seamlessly with my home computer and my husband’s phone.
I can use the YNAB app to double-check how much we’ve already spent in a budget category – this is great if we’re trying to stay under a certain amount.
I use YNAB’s reconcile feature to make sure my accounts balance and that I haven’t missed any entries. I log on to our bank’s website and match up the transactions with our YNAB records.
Since we’re entering most purchases immediately, it only takes a few minutes to reconcile our accounts each week. A few clicks to match up our transactions and I’m done.
YNAB has a host of other fun features.
Reporting is dreamy, especially to a numbers nerd like me, and the whole interface makes you feel that you have all your financial data at your fingertips.
YNAB actually goes way beyond tracking your purchases – it’s main goal is to help you budget. We use it to keep track of money set aside for future purchases in sinking funds (more on that in a future post). They even have free classes on budgeting! That’s my kind of company. But don’t take my word for it – YNAB has dozens of success stories on it’s website.
I realize it’s not much fun to pull out your phone and enter a transaction every time you buy something. Maybe your friends will give you a hard time for being so stingy (not that budgeting makes you stingy, but to those who don’t do it, it’s a strange practice). But I promise you that if you’re looking to increase your savings, live beneath your means, or get out of debt, tracking your purchases is the absolute first step you must take.
Want to try out YNAB? Get the free trial and a coupon.
If you’re interested in trying out YNAB, they have a free, fully-featured 34 day trial. And once you’re ready to buy, stop back here for a coupon. When you buy YNAB through this link, you’ll save $6 off the purchase price. (affiliate link) See you’re saving money already!
Perhaps I do sound like a budgeting bully.
But this is advice that has served me well and I hope you find it useful, too. Can we still be friends? 🙂
Do you track your spending? What’s your preferred method of keeping track? Let’s discuss in the comments.
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