Financial Success Starts with Tracking Your Spending

You go to the grocery store and fill your cart with food, household items and other necessities. When you proceed to the checkout line, you load all of your items onto the conveyor belt and try to pay. But then, unfortunately, the cashier says your debit card is declined. There’s no more money in your account. You don’t have cash. You’re out of luck. Does this sound familiar? If so, it may be time to start tracking your monthly spending.


For many Americans, living paycheck-to-paycheck is all too common. In fact, the median American savings rate is close to $0. This means it is hard for most people to save money. And most don’t take the time to create a budget or track their spending. This can lead to those difficult (and often embarrassing) situations where your money runs out before your next paycheck comes in. Luckily, there are some simple ways you can learn to track your spending.


To find out where your money is going, start with where it’s been. Pull up your bank and credit card statements for the last few months. Sort your purchases by type (groceries, dining out, entertainment) or by store. Then add up all your purchases for each category. If what you see surprises you, look for ways to eliminate the non-essential expenses. Realizing that you’ve spent too much eating out or at a particular wholesale, clothing, or big box store will make you think twice before making the same mistakes in the future. Repeat this exercise every month and you’ll have more control over where your money goes.


Now that you have a better idea of your spending habits, use this information to set up your own personal budget. Your budget doesn’t have to be fancy. You don’t have to use expensive software or have an accounting degree. Just open up a spreadsheet, use pencil and paper or a smartphone app, and list everything you buy. Again, it’s important to categorize your expenses and keep a running tally that you can check often to see how you’re doing.

Start with a simple, bare-bones budget if it’s easier to manage. Or set up a zero-sum budget to account for every incoming and outgoing dollar. Whatever method you use, keep your tracking consistent. Put in the time, be disciplined, and stick to your budget. But don’t be afraid to make adjustments down the road if you’re having a hard time staying motivated.



Changing your spending habits requires a change in lifestyle. And keeping track of your purchases can help you to bring your lifestyle in line with your income. Before long, your ability to track your spending (and your ability to budget) will become less about meticulous money management and more a natural way of living. Just stick with your spending goals long enough for your lifestyle to adjust to its new limitations. Eventually, proper spending habits will become second nature and the days of living paycheck-to-paycheck will be a thing of the past.