At The Financial Gym, we have the good fortune to have seen a lot of people undergo huge financial transformations. When I see this happen, in an effort to offer the best support I can to future clients, I always ask what the top 3 tools were that helped move the financial journey forward. I almost always hear the same 3 answers: Tracking your spending, automating your savings, and meal prepping.
We will go over the other two in later posts, but today we’re going to cover tracking because it is the one I get the most resistance to, but the one that I think has the most impact.
The resistance comes because the job sounds tedious. Recording every transaction sounds hard, and it can be easy to forget, so people feel like they just can’t do it. However, much like any other habit, you can change this one, too.
As a trainer, I have also gotten a good idea of what systems work best for people. The same system is not always going to work for everyone, so here are the top 3 spend tracking systems that have worked for my most successful clients.
A good old fashioned calendar.
I have to start with this one because it is the one that I use because I am a tactical learner and it helps me to have to write things down by hand. I have a paper calendar, and I hang it on my refrigerator. Every time I come home from an outing, or at the end of my day, I write down what I have spent throughout the day. Groceries: $40. Gas: $35. Dog treats: $7. I track throughout the week, and on the right hand side I total it every week so I can get a sense of my average weekly spend, and therefore my average monthly spend, over time.
The Notes app on your phone.
Not everyone is a pen and paper person like I am. For some of us, our phones, because they are so ubiquitously in our hands, are the easiest tools to use. You can just create a new Note, label it with something like “Week of September 7th,” and just record all of your purchases. You may want to categorize these later, or create a system to categorize them as you go, but it can be a good system because it allows you to just stop briefly throughout your day, or while you’re on the train, or while you’re waiting in line, and plug in your numbers as you go along.
Designating a specific debit or credit card for all of your variable spending.
For those for whom the hands-on practices don’t resonate, I recommend opening up a checking account specifically for discretionary spending, or using a pre existing credit card, and using it just for that cause. That usually means automating a weekly transfer of funds in the amount of your weekly spend limit, and then keeping track of how close you are to your limit as the week goes on. This means the account will do the tracking for you, and you just need to check your app regularly, which is something that many of us do anyway. If you go the credit card route, you can just pay your bill weekly on Fridays, and have an idea of how close you are sticking to your budget!
If you have to work through a couple of these options before you find a solution that works for you, don’t worry. The best way to track your spending is the one you’ll stick to!