Want to save more money? Start tracking and documenting your spending. Every single penny. (I’ve included a template for you to use, too!)
I used to have a spending problem. It’s not that I was spending outrageous amounts of money on things I didn’t need, it was more that I was spending “beyond my means” in everyday situations. If I was out to drinks with a friend, I always thought it was no big deal to go ahead and pick up a round of drinks. I wasn’t being a high roller, I was just being a “nice guy” to the tune of $35 extra dollars. It was these moments of being a “everybody’s favorite buddy” that I ended up getting myself into lots and LOTS of credit card debt (law school also contributed).
I’ve tried a couple of ways to keep track of my daily spending (and wrote this blog post about it). I kept a black notebook in my pocket where I tried to write down every expense I made, but sometimes I’d forget to bring the notebook with me and, truth be told, I eventually lost it. Too small. Not to mention the headache of doing all the math myself! This was part of the reason why I started the habit of rounding up when it came to tips. Rather than paying $1.00 tip on a $3.80 bill, I’ll pay $1.20 ($4.00 total) just to make the accounting easier.
My spending continued to spiral out of control, so I searched for another technique to reel in my spending. That is when I discovered this Annual budget spreadsheet on my Google Drive. This is a great template, broken down into categories of spending (housing, entertainment, groceries, etc.), including an easy to use “Set up” tab, Income and Expense tabs, and a helpful summary page including a huge line graph of comparing your spending habits. It’s a great visual tool to help you get a handle on your finances.
Another beneficial part of using this spreadsheet has helped me structure out my monthly credit card payments. Targeting credit cards with the highest APR has helped me cut down on the amount of fees I am paying for simply having outstanding debt. By having these payments laid out in the spreadsheet, I know which credit cards I make the minimum payments on and which credit cards I pay off (as much as I can). I’ve also added a helpful date chart to my own spreadsheet to make sure I never miss a payment (and end up paying more in fees).
Since including this spreadsheet into my daily habits (I can access it from my laptop, my iPhone, or the old fashioned way of saving my receipts to input them at the end of the day), I have seen a steady decrease in my senseless overspending. Over the past three months, I have decreased my monthly spending by nearly 20% each month, and I am close to paying off two of my credit cards. I’m pretty pumped about that.
What methods have you found to manage your personal finances? Spreadsheets? Notebooks? Share your experiences and your success stories of owning your personal finances.