Budget Making Step 1: Tracking

Saving money is almost always a New Years Resolution for people. Yet years go by, and things don't seem to get much better. Money seems to fly in and out of your account before you even had a chance to see it.

A huge part of changing this around is budget management. People come to me asking for Budget help all the time. Which is great! I think people conceptually understand that making a budget is important. They want to, even if they don't do it. I think a lot more people would budget, if they only knew how to get started.

Step 1 in making a budget is: TRACKING YOUR CURRENT EXPENSES.

What happens every time I help someone make a budget without tracking first, is that they always under estimate things - especially groceries. They think they spend maybe $200- $300 a month on food, but it is almost always closer to $600 - $700. What do you get if you write in your budget $200 for food when you are used to $600? A budget that quickly goes does down the drain. It is unsustainable. Your budget will be a mess, you won't understand how it went so wrong, and you'll stop writing out a budget.

So, step one is track your money. Where is it going day by day, week by week, month by month? If you do all of your transactions with a debit card, it's usually pretty easy with most banks to go online and just check what your purchases were. But most people use multiple cards and cash. Even if it's all on a debit card, it's time to WRITE IT ALL DOWN.

You can do this in multiple ways. Some banks have online trackers that you can fill in. There are also apps like Mint that a lot of people like. Honestly the thing I find the most helpful is a good ol' pen and paper or an excel spread sheet.

Start today, and write down every purchase you make. But like, seriously write down EVERY. SINGLE. THING. And don't be lazy! Do it every single day. If you do miss a day, go back through your bank and look up the exact amounts. Save receipts until you record them. (But having a stack of receipts is NOT tracking... You've got to record them or that stack of receipts is just a useless mess in your house.)

You must track for a complete month before you are ready to start making a budget. But do not stop tracking at that point! You must continue to track. You might spend $350 on food this month, but $495 next month. So it's important to continue to track even as you start trying to live by your budget. At the beginning of each month you will reevaluate, and make budget adjustments. It will probably take 3-6 months before you feel like you have tracked enough to have a solid and defined budget.

Is this time consuming? Well that all depends. The time it takes to actually write down your spending for the day takes about 2 min - 5 minutes. This readjustment at the beginning of each month takes about 15-20 minutes. But when you are not used to it, it might seem daunting and so you only think about it, and don't actually do it. Thinking about it and not doing it can be extremely time consuming- might even be an hour a day! So to take the easy road that will get you successful results, just DO IT. Take a small amount of time to write down what you are spending, and make a budget at the beginning of each month.

Money doesn't have to be the thing dragging you down, or your 'worst opponent'. You can get money to be a team member for you and friend. But you've got to take the initiative on this. Money won't magically start working in your favor. You've got to commit a few minutes to dealing with it every day. It's like having a dog. If you don't care for your dog, it might run wild and make messes, or get sick, or smell really bad. It doesn't take a crazy amount of time to feed, walk, and bathe your dog. But it does take some time. And it's worth it! Then you have a happy dog you want to spend time with. The same is true about money. Treat it with a little kindness every day, and it too will stop running away and come home.

If you would like more advice or help tracking your money, feel free to contact me! I'd love to sit down with you or email you templates to get you started.

Here's to your success with money this year!

Elisa 

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