Here’s a question for you:
What percentage of your money could you account for, if asked, off the top of your head?
Most of us think we have a fairly solid sense of our spending.
When clients actually go through the exercise of *tracking* their spending, though, they inevitably get a surprise or two.
Common underestimates include:
- weekend getaways (average estimate: $200 or so. average actual: $400 or so)
- kids’ birthday parties
So, today I’ll be asking Dee and Chris to track their spending for a month. It should take no more than 5 minutes a day, and pays off big time. For one thing, it eliminates that uncomfortable question “where did my money go?”. More importantly, it gives valuable data that can be used for decision making down the road.
In Dee and Chris’s case, this will enable them to discover what income they realistically need to support their lifestyle. It will also enable them to discover if their is some spending that could be minimized so the money can reduce their debt instead. They seem to be fairly careful shoppers, so possibly the info about income needed will be more important.
I’ll be sending them a simple excel spreadsheet template that I use personally (if you’d like a copy, e-mail me at Nancy at your money by design dot com). Another fantastic option is pennyminder – free online software that accomplishes the same thing (Canada’s answer to Mint).
You can follow Dee’s progress this week on cbc’s website.
Readers: do you or have you ever tracked your spending? How did it help you?
Photo Credit: Life in LDN