How To Track Monthly Expenses And Budget

Learning how to track monthly expenses and budgeting requires a change in habit that takes discipline and dedication. Once the habit is learned, it will become easier and the rewards of having extra money will validate the effort. Learning to budget is more than mentally allotting spending limits.

1. Find out when your bills are due. With automatic bill pay, some people don't know when their bills are due or when the money comes out. There is just that sudden surprise of a recently depleted bank account when someone "thought" they had more money than they really did. This is a mental disconnect from your money that is the root of budgeting problems. It is the appearance of money when you check your statement online that tricks the average person into thinking they have more money than they really do.
2. Write down when bills are due on a calendar. Write everything down on a calendar that you look at everyday, so that you know when your payments will be made.
   
3. Keep receipts and analyze. For the next two to three months, keep every single receipt and stick it in the box. This is your starting off point. Once your few months of tracking are over, go through the receipts and understand where your money is going. One of the biggest eye openers are those little daily expenses that add up over time. For example, a daily latte at $4 will cost an average of $100 per month.
   
4. Use online tools or buy budgeting software. There are a lot of really good online tools available for budgeting. Mint.com allows you to set budget limits, will keep all of your accounts - checkings, savings, portfolios, credit cards, etc. - in one place. If you are reaching a low balance on your bank account, they will send an alert. If you have overspent in one aspect of your budget, they let you know that too. There are also budgeting applications for your computer and cell phones. Anytime you make a purchase, you can log it into your phone, and or log it onto your computer.  (another reason to keep receipts!)
   
5. Allow room for success. If you make a budget that is too restrictive and it makes it impossible for you to succeed, its time to reevaluate that budget.  You may have unrealistic goals, like saving $300 every month, when you have an almost break even lifestyle. Aim lower, maybe $50. If you are committed to making life changes, then you will see where you can cut back a bit more and add to your monthly savings.