Step 1 in Wealth Building: Track Your Spending

My twenties were spent finishing my undergrad, moving 1300 miles away from home, working 1, 2, sometimes 3 jobs, starting and finishing my graduate degree, buying a dog, cutting down to one job and buying a house.  Through this time a lot, a lot, of money passed through my hands, but since I did not have a plan for it, a lot of it was wasted.  I am embarrassed to say I don’t know how most of it was wasted.

To get a handle on this and to start building wealth, I decided to start tracking every dollar that I earned and spent.  I started tracking in my twenties but finally became debt free (except for my house) in my thirties.  Tracking my spending helped me get a handle on where my pit falls were.  It put an end to mindless spending because I knew I had to write down the purchases when I got home.  While it was still a rocky road with some failures, I contribute this step to transforming my relationship with money so I was able to become debt free.  Seeing the numbers in front of you is a very sobering experience!

Let’s get to the fun stuff, excel spreadsheets!  Below is a screen shot of the spreadsheet I use each month.  Your categories may look a little different and that’s fine.  Before the month starts, put in your expected income, static monthly bills (mortgage/rent, cell phone, internet, water/electric, etc.) and well as the amount you will be saving (emergency fund, retirement savings, etc.).  You should be saving between 10-20% percent of your income, I will go over savings in another post but this is enough to get you started.  Once you have these numbers inputted, the amount you have left that you can spend in your various categories.  I like to set a limit per each category, the limit is written at the bottom of each column.  That helps me from spending all of the grocery money in the clothes category!

Example Monthly Budget Sheet
Example Monthly Budget Sheet

Once you have tracked your spending for few months you will begin to see a pattern in your spending.  Maybe you spend money when you are happy and out with friends.  Or you spend money when you are lonely and bored.  Or maybe you spend money out of convenience, such as buying lunch at work each day.  These habits can wreak havoc on your budget and wealth potential.  Once you figure out what your relationship is with money, you can begin to change that relationship.  Tracking your spending and using this excel sheet will help you figure out where your pitfalls are.

There are many great applications and websites that you can use to track your spending and create a budget, as an example, we are currently going through the Dave Ramsey program and he has an app called Every Dollar.  Utilizing different applications and websites is a great way to gain new ideas on how you want to tailor you own budget but I always opt for using excel.  This way you have control over your own data and are able to analyze the data how you choose.  You are not stuck to the predetermined analysis and if the website/app goes down you still have your data!

If you would like the excel file for the spreadsheet, please leave me a comment below.  Be sure to leave your email address when prompted.  I will email it to you.

Happy tracking!

 

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