my life in 10 years on a piece of paper

The time is here for setting personal finance goals and resolutions which, for most people, come with a hope of a more solid financial life and stable financial future.  Managing money better, along with getting in better shape, seems to be near the top of the list for most everyone when new year goals and resolutions are made.  For most, those goals will fall by the wayside within just a few short weeks after the new year begins.

Today, however, I’m going to share one simple goal idea for those new to the world of having control over (or wanting control over) your personal finances.  In the nearly two years that we’ve been having a solid handle on managing our money, the one thing that has been, by far, THE most beneficial to us, and the one thing that I think every single person should do for at least one year, is to track all spending.

Personal Finance 101

Why is tracking spending so very important to financial success that I’d suggest it above every other singular financial goal?  Because we as humans are busy.  We work, we play, we care for family and/or friends, and we do a million other things we probably can’t even think of right now.  Our busy schedules and our busy minds mean that something often has to go.  We can’t remember everything and do everything.  And I’ve found that when it comes to money, most everyone, unless they’re spend-tracking, forgets just how much they spend each day, week and month.  Not knowing what you’re spending each money has the potential – and usually leads – to creating huge leaks in your financial ship.

A Spend-Tracking Lesson

When we chose to start getting a handle on our finances two years ago, in January of 2013, one of the things we decided to do was to go back over our 2012 expenditures, via our bank statements, and see exactly where our money had been going.  We had always struggled for money and couldn’t figure out why.  We didn’t buy a lot of clothes, furniture or other things.  We didn’t often go out to eat.  We weren’t taking vacations, yet we never had any savings and our consumer debt was increasing year by year.

What we found when we went back and listed our 2012 spending by category was shocking.  By month three, I thought I might toss my cookies.  What we found was this:

-our $600 grocery budget was really closer to $900, because of all of the “little” trips to the grocery store to pick up “a few” things.

-our “not going out to eat” budget was, in reality, a $175 a month budget, due to trips through the drive thru and the big box snack bar

-our “let’s not drive so much” gas budget was, in reality, about $190 a month, even though 75% of the places we went was within a 5-10 mile radius of our home.

Lesson learned?  Spend tracking really can make the difference between financial success and financial failure.  The money we thought we “weren’t spending” in 2012 added up to a whopping number, close to $8,000 a year.  No wonder we continued to go into debt!

My friends, goals and resolutions are hard to keep: I get that.  And personal finance goals in general often create feelings of restriction, denial, and general “punishment”.  But our family has found that tracking our spending has given us freedom.  It’s given us the freedom to know exactly where our money is going, so that we can make sure we’re using it on things that are truly important to us.

If you don’t already track your spending, I highly encourage you to make 2015 the year that you write down every single thing you spend your money on, so that you have a clear and complete picture of what you’re doing with your cash, and from there, the freedom to make your financial picture whatever you truly want it to be.

Have you ever tracked  your spending?  If so, has it changed the way you manage your money?