19 January 2024
Margo Lestz
Financial Education
How Much Do You Spend Each Month?
The average person makes from 100 to 200 financial transactions per month. That’s a lot to keep track of. And we have so many different ways of paying for things: We can pay with cash, credit cards, debit cards, apps on our mobile phones, automatic bill payments… No wonder it’s so easy to lose track of how much we are spending.
The only way to truly find out how much money is leaving your bank account is to track it. Tracking your current spending habits is a necessary step in taking control of your finances, but just knowing how much you are spending isn’t enough.
If you want to really understand your spending habits, you also need to take note of the circumstances around each spend: For example: Where were you? What time was it? How were you feeling? Who was with you? These may seem like unnecessary details, but they might help you become aware of spending triggers so you will be able to avoid them in the future. So let’s get started…
Take the 30-Day Tracking Challenge
Gather Your Tools
You can use pen and paper for this exercise, or you can take notes on your phone. There are also expense tracking apps, but for this 30-day challenge you will need to record more information than most of them allow.
See Genistar’s 30-Day Expense Tracker form HERE for the information you should record. Along with the date and amount spent, you’ll also need to make note of the circumstances surrounding the expenditure which will help you see patterns later.
Whichever method you choose for tracking your expenses, make sure it’s easy to use. You will need to keep it with you all the time so you can jot down your expenditures immediately.
Know the Rules
Rule No. 1: Don’t Change
Don’t change your spending habits… yet. The object of this exercise is just to get a picture of how much you are currently spending and the circumstances around each transaction.
Rule No. 2: Record EVERYTHING
For this to work, you must commit to recording absolutely everything that you spend for 30 days. Every penny. From tiny purchases such as buying one candy bar to your largest expenditure which is probably your mortgage payment. Don’t forget to record payments that automatically come out of your bank account.
Rule No. 3: Record ALL the Information
It’s important that you fill in all the information associated with each expense, as shown on Genistar’s 30-Day Expense Tracker Form. This information will be helpful at the end of this exercise to help you put your spending into perspective.
Rule No. 4: Reflect Daily
Each evening take the time to look at your record of expenditures. Have you included everything? You should make it a habit to jot down every expenditure immediately. Write down the amount, but if you don’t have time to fill in the other details, you can do that in the evening. Then reflect for a moment about your spending for the day. How do you feel about it?
Be diligent and keep at it for 30 days. It may be tedious at first, but it will soon become a habit – and maybe even fun.
What Happens Next?
By tracking your spending for 30 days, you will have gathered valuable information that can be put to good use. You might be surprised at what you will discover about your spending.
Now that you have a detailed picture of your monthly expenditure, look at each one carefully. Bring out the paper and pen and take notes: Do you notice any trends? Do you spend more on certain days or at certain times? Are there any signs of spending triggers? Do you spend more when you are hungry, or upset? What about when you are with other people? Just look at your expenditures carefully and jot down any patterns that you identify.
Now make a list of any expenses that could be eliminated or reduced along with the amounts. How much could you save?
The point of this exercise is to learn about your spending habits and identify changes that could be made. What did you learn about your spending? Are there changes that you could make?
Take Action
Now that you know more about your spending habits and spending personality and have identified expenses that could be reduced or eliminated, you are in a good position to set up a realistic budget. There are plenty of budgeting and expense-tracking apps on the market that you can use. If you prefer, you can make your own forms on your computer, or you can even use an old-fashioned notebook. It doesn’t matter, as long as it works for you.
Tracking your expenses is an important step in your journey to financial freedom. Once you get into the habit of tracking all your spending, it might even become fun. It’s exciting to get your finances in order and know that you are taking control of your financial future.
Your Genistar representative can help you get on the right track financially with our complimentary Financial Game Plan (FGP).
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