Key to wealth: Tracking Your Expenses

HighOnHI

photo by: HighOnHawaii

Can you tell me what your income is? Not your annual gross income, but your net income. Do you know about how much you spend on non-essential expenses?

A Gallup poll from June 2013 says that 32% or one out of three people “prepare a detailed written or computerized household budget each month that tracks income and expenditures.”

If you’re the one out of the three good for you. If you’re, not listen up.

Where is it all Going?

A poll from SunTrust Bank  noted that almost a third of Americans making over $75,000 a year are living paycheck to paycheck. 44% of the people polled, blamed their situation on lifestyle purchases such as dining and entertainment. Tracking your monthly expense allows you to know where you are spending on lifestyle purchases.

Write It Down

If you’re not making it a habit of tracking expenses, you’re making it a habit not to.

Start at the beginning of the month and keep an account on excel or in a notebook so that you can make sure that you log anything that you buy for that day. This is so that you can keep a running total of what is going on in your financial life. When you get paid make sure that you add on to that list too. As the month goes on, make a financial health check and see how well your doing. You might find out that you’re spending too much during that part of the month, and you’ll be able to make the necessary adjustments.

Build a Lifestyle

It doesn’t matter how much or how little you make, the reason why you’re living paycheck to paycheck is the same reason. If you’re spending money on things you can’t ever remember buying, you won’t figure out what where the problem lies.

It’s important to keep in mind that this exercise is to allow you to make better decisions about your money. As you get better at tracking, you’ll figure if you like to “Treat Yo Self!” more than you like to save moeny for a later date. It’s about creating financial awareness and creating positive money habits.

I look forward to writing about the different types of budgets in the future.