7 Ideas for Personal Budget Tracking

At the end of the month, if you find yourself digging for coins at the bottom of your purse or saying to your spouse, "Where did all the money in our checking account go?" it might be the perfect time to start tracking your personal spending. Whether you're saving for a down payment on a home or you just want to know how much you're spending on what, tracking your personal spending will put you one step closer to your financial goals every time you pull out your wallet.

Track Income and Deductions

If you're like most employees, you probably have direct deposit. Save your pay stubs. If your company makes your pay information available via self-service intranet, save electronic copies and organize them by month and year, so that you can include those records using your personal finance software. Tracking your income should include reviewing every paycheck to ensure you get the correct base pay, plus any overtime you might be earning. Maryland-based financial adviser and Certified Public Accountant, Lamont Corprew, advises, "Every payday, double check all of your deductions -- tax withholding, health coverage premiums, your retirement account and deductions for charitable contributions you may have authorized being taken out of your check." This ensures you're receiving consistently accurate pay so that you have the money you need to meet your personal bills and obligations.

Track Daily Purchases

On the first day of the month, begin tracking your personal spending using your personal finance software. Enter your purchases, regardless of how much or how little you shell out. If if it's a 99-cent soda on Monday afternoon or a box of Girl Scout cookies on Wednesday include it in your daily purchases. When you and your co-workers go to lunch, include that in your daily expenses and don't forget to add the tip you left, because that comes out of your pocket, too. At the end of each week, reconcile your daily purchases and your monthly purchases to evaluate your overall spending.

Track Payments that Vary

Certain payments -- such as utility payments -- can be tough to track and to fit into your budget, because they can vary a lot month to month, which makes it hard for you to see the big picture. Some utility companies offer free tools to help. For example, in California PG&E allows you to look at graphs of a year's usage and to view two year's worth of payments. If you've been keeping track of your bills for a while, you can also look for trends and averages in your personal finance tracking. Payments that vary from one month to the next require you to stay on top of your spending. Corprew says, "Many utility companies offer ways for consumers to budget their monthly expenses evenly across a 12-month period, which enables easier tracking." He says that signing up for programs such as "average bill pay" or "average pay plan," is a big help. The utility company averages your usage over the course of a year and provides you with a monthly amount that stays the same year-round. This is a tremendous benefit for tracking your utility bills without having to deal with the wide variances that seasonal fluctuations create.

Track Food Costs

Most people these days don't eat every single meal at home. Your food costs may include expenses not only for groceries but for dining out, pizza delivery and take-out. Corprew suggests using two separate categories for food, one for groceries and the other for everything else. For example, if you buy $150 worth of groceries every week and Friday is family pizza night where you spend $25, your total for the week is $175. Using the two categories, you can also easily see how much you're spending for necessities and how much you're spending for fun.

Track Transportation Expenses

Your transportation expenses include a lot of different categories. For example, you might have expenses for a subway or bus pass, car payments, car insurance, gasoline, and car repair and maintenance. When you include such expenses in your tracking as oil changes, new tire purchases, new wiper blades and even car washes, you get an accurate sense of the big picture of what you're spending for your transportation -- and what you can afford if you decide to make changes, such as trading in your old car for a newer model. If you're still paying on your car, Corprew notes that this kind of tracking may help you decide whether it's time to trade in your car or continue making repairs. He points out that this is particularly helpful when you're considering buying a car, leasing a car or evaluating the cost of having a car at all.

Track Entertainment Expenses

Tracking your entertainment expenses might be helpful in a couple of different ways. Some people are looking at ways to cut back on expenses -- for example, if they want to pay off credit card bills -- and seeing how much they pay for entertainment can help them do that. Others just want to see whether they're getting the most out of their entertainment dollars. You can track costs of club memberships, park and museum admissions, movie and concert tickets via your personal finance software so the information is at your fingertips. For many people, their annual vacation is a big-ticket item once they add up hotel costs, airline tickets and admission to various sites and attractions. Even if you don't take big vacations -- or if you might like to save up for one -- it might be helpful to know how much you spend on the occasional night out, your cable bill, or music downloads.

Track Needs vs. Wants

Whether you're saving up for something special or just want to pay off other bills, tracking can help you cut back on unnecessary spending. Once you've been tracking for a while and have a sense of where your money goes, you can easily classify your spending habits and track "necessary" versus "unnecessary" spending. If you prefer, you can use the terms "needs" and "wants" instead, which Corprew points out is a far more positive and less punitive approach when it comes to analyzing your own spending habits. For example, getting your car's oil changed falls under "needs" because it's a strongly recommended maintenance step, but hanging out with friends four nights a week is one of those spending habits that falls into the "wants" category.

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