Once upon a time, I was as enthusiastic about health, nutrition, and working out as I am about personal finance today. During that time, I helped a bunch of people achieve their nutritional/weight goals in a realistic time frame. Out of all the tips and tricks that I gave people, there was one piece of advice that seemed to be the most effective which can be applied to personal finance as well. What was that advice?
Write it down.
In terms of weight loss, writing down what you ate during the day in a log book resulted in the realization of the actual number of calories consumed. From there, nutritional consumption could be tweaked based on their goals. The same principle applies for savings. For people who are looking to increase their savings, writing down what is spent during a typical day will reveal where expenses can be reduced.
If you want to give this a try, at the end of the day, take a moment and grab a pen and some paper. Briefly scribble down everything that you purchased along with the amount spent. Do this everyday for a week. Take a look at where you are spending your money. Buying Tim Hortons everyday? How about your lunches? Eating out much? Beers after work? For most people, just seeing everything on paper is a real eye opener.
Since we are in the digital age, instead of using ink, you can use a simple spreadsheet program or money management software like Ms Money or Quicken. If you like to do everything online, you can use Google’s online spreadsheet or web based spending trackers like Wesabe.
How many of you already track your spending? If so, what do you use?