If you want to save money, your first priority should always be to get a grip of what you are spending now. We are all guilty of handing over our cash without really thinking about it but the more aware you become, the more obvious it is where you can save.
Tracking your spending for a month is a good way to familiarize yourself with your own habits. Indeed, it’s a good idea to track your spending this way before you even start trying to save.
Getting Started: Facing Your Fears
Take a look back at the last three months of spending on all your checking accounts. This will probably horrify you, to begin with, and lots of people get upset when they realize just how much money they are wasting.
But please don’t judge yourself too harshly. Money management is all about transparency and you should congratulate yourself on making the first big step. Facing up to your problems is never easy but now you can see your spending patterns, you can make positive changes. Money-related anxiety is far more commonplace than you might think and tackle the issues at the root of your problem is the best way to start.
Creating Spending Categories
Now that you can see your spending, you should allocate different basic categories such as utilities, groceries, eating out, fun money and other. This is an easy way to see how much you are spending on different things. For example, you might not think that you are spending so much on groceries because you do a couple of small shops a week but when you add it all up, it costs much more than you imagined.
Once you have allocated your categories, you should start tracking your spending on a daily basis. The more aware you are, the easier it is to decide whether this is a good use of your money or whether you could be more sensible and plan better.
Plan, Cut, and Track
Now that you are more familiar with your spending, you can start to make better choices. Planning ahead will always benefit you when it comes to things like grocery shopping and you would be surprised just how much you can save (and how much less food waste you produce) when you plan meals a week ahead.
You can also see where you might be able to cut some costs. Coupons are a great way to save money on day to day items but you should also think bigger and consider switching utility providers to see if you can get a better deal. Even a tiny saving can make a difference as the more you chip away at your costs, the most you will save.
Even while you are planning and cutting back, you should continue to track your spending. Not only will this confirm that your strategies are working but it might also show you where you may wish to spend a little more. Save now and play later.