Tracking your spending is often the starting point for managing your personal finances. You might start tracking for a number of reasons…you want to start saving for a house, you’re broke before the next payday, you’re about to change careers, you are generally curious about where your money goes or maybe you want to tackle your debt.
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How do you track?
You can track your spending in a number of ways. For simplicity, you may pay for everything on a card and go over your bank statements to see where the transactions were made. You may take pen to paper and write down what you spend as you spend it by keeping a small notepad in your pocket or bag. You might keep all your receipts and tally up everything every week or month.
It’s key to track how much you spend because it will help you answer the following questions:
- Are you headed for bankruptcy?
- Are you spending far too much money on things that don’t make you happy?
It will not only show you if your spending patterns will lead you to financial disaster but it may also show you that you could do with relaxing your strict budget and aggressive savings plan.
Importantly, it will give you an indication on whether your current level of spending and saving is sustainable.
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Over the years, I’ve used a number of techniques to track. The ones I’ve listed above are ok but the problem is you only end up with a total amount of spending. You don’t automatically see where the money is being spent in terms of eating out, clothing and holidays. In order to do so, you have to go through each transaction and tediously add everything up.
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For the last two years, I’ve been tracking using a spread sheet. I had a list of categories for every transaction but unfortunately my lack of Excel skills meant that a lot of what I was doing was still very manual. This was not only time-consuming but also prone to errors. I needed a spread sheet that automatically tallied everything so that I only had to input my transaction once.
Using the Life-Life Abacus
When my friend (fellow author FW) introduced me to his spread sheet, I was hooked! It did everything automatically. I could see exactly where I was spending my money and what that was as a percentage of my income. If you want to automate the way that you track spending, the Abacus may be the tool for you. You can read more about the free spread sheet below.
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*Image courtesy of Rob Wiltshire atFree Digital Photos.