August 25, 2024 • 34 mins
What is tracking for personal finance and how is it done to help with spending problems.
Article Link:
https://bethebudget.com/reasons-to-track-your-expenses/ By Zach Buchenau
Please support the show by subscribing, can cancel at any time. Thanks for the support.
- Subscription page: https://www.buzzsprout.com/961804/support
- Contact: ReduceDebtIncreaseWealth@Gmail.com
- Wanting Budget Spreadsheet Place Spreadsheet as Subject
- https://Happygiraffe.org/live
- https://www.shopfinancial.com/lantianbaiyu/
All other inquires place topic into Subject.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Charles McDonald (00:03):
Hello, I'm your host, Mr. Chuck, a retired
accountant turned truck driver,I reduce my debt in a relatively
short period of time, debtreduction to achieve financial
freedom takes commitment,confidence determination. What
is tracking? What is trackingfor personal finance? How is it
(00:25):
done to help with spendingproblems? And why should you do
tracking? Tracking is the basicsof your personal financial life.
If you're not doing tracking,that's probably one of the
primary reasons why you may havesome spending problems or debt
(00:49):
problems, which is the result ofspending more than what you
make. So what is it tracking isnothing but the operation of
recording all your income andall your expenditures that come
in and out of your savingsaccount, your checking account
and your credit card accounts.
It says a matter of dataidentifying by category where
(01:13):
your money is going and whereyour money came from. Most 99%
of the income is going to befrom your job, or from your self
employment, a side hustle orfrom a casual sale, something
Grodd sales, those type ofthings, but spending as a bigger
(01:34):
problem, tracking where yourmoney goes. So you know how much
it's going to wear is importantand to get in your personal
finances under control. And thenknowing the dollar amount that
you need to pay each and everymonth to meet your needs, that
(01:57):
you have needs. And you have oneneeds is what you need to pay in
order to live. Simply puthousing, everything related to
housing, whether you're rentingor buying a home. It's the
monthly payment, your mortgagepayment, your real estate taxes,
(02:20):
your insurance, maintenance,utilities. And I also include my
cell phone, because in the olddays, you used to have a
landline for your phone. So I'mstaying with that philosophy. So
your cell phone, charge shouldbe under housing, general
(02:40):
category. And then you havetransportation, and then you
have food, then you have pan allyour debt, your credit card
bills and savings. Those shouldall be your needs. There may be
some more for you, depending onyour situation. But those are
the main categories. Anythingelse you pay is a once whether
(03:04):
it's entertainment, streamingTV, cable TV, buying those
packages for sports, whetherit's football, basketball,
baseball, whatever sports youlike to watch, if you got to pay
extra for that, for whateverchannels that you want to
particularly watch, that's allconsidered a need. So that is
(03:27):
something that you pay for,after all your wants are taken
care of. I'm assuming if you'relistening to this podcast, you
probably have some type of debtproblem. So the first step in
that is identifying the problem,you have too much debt. Or maybe
(03:48):
you're thinking my income is notbecause I'm spending more than
what I make be have figured thatpart out. But it's not how much
you make, that you can control.
It is because of the job andwhat you do to make a living.
(04:08):
But what you need to control isthe spending of your money. He
work hard to earn your money.
It's hard to get takes a longtime. But it's so easy to get
rid of it to buy something youdon't really need. And then you
get in to a debt problem, thanksto credit cards. So you
(04:30):
identified a problem, how youfixed a problem of you have too
much debt in order to fix that.
You need to reduce yourspending. So we need to know how
much every month do I pay for myneeds, housing, transportation,
(04:51):
food, credit card bills, and alittle bit of savings in theory,
and how much I have left afterthat and order to keep your
spending under control so youdon't overspend on your wants,
and then that causes a problemfor your paying for your needs.
(05:11):
So that's why you're gone totrack. And here's the 10 reasons
why you should track yourexpenses from the professionals.
Do you track your expenses on adaily basis on for many people,
the idea of logging everytransaction into a personal
budget sounds like the world'smost boring and significant
task. But truthfully, there's anumber of critical benefits. So
(05:35):
why should you track yourexpenses, and short the main
reason you should track yourexpenses is identify and
eliminate wasteful spendinghabits, and your financial life.
However, consistently, trackingyour expenses will help you
maintain control of yourfinances, and promote better
financial habits like saving andinvesting. Honestly, there's
(05:59):
quite a few benefits that keeptrack of your spending behavior.
Maintaining financial control isthe first one. If it comes to
personal finances, being out ofcontrol is not something anyone
would strive for. There'snothing financially worse than
feeling like you don't have anyidea what's going on with your
(06:19):
money. The good news is when youmake an effort to record every
financial transaction you make,you are essentially taking the
reins on everything andeverything, anything and
everything involving your money.
At any one time, you'll knowexactly how much money is
sitting in your bank account,and how much you can spend. And
(06:40):
in other words, when you trackyour expenses, you take complete
control of your finances. Numbertwo, holding yourself
accountable. If you have anyplans on saving, investing,
getting out of debt or buildingwealth, what is holding you
accountable. I mean, we can allset financial goals and have
financial dreams. But if you'renot tracking your expenses,
(07:02):
there's nothing to hold youaccountable to make you when you
make a bad financial decision.
Tracking your expenses hold youaccountable for your future
financial goals. And in the longrun, that can be the difference
between broke and wealthy.
Tracking your financialprogress. In addition to holding
yourself accountabletracking your expenses on a day
(07:22):
to day basis, helps you see yourprogress on the road to
financial goals. Sure, there maybe times you need to answer
yourself for a bad financialdecision. But keeping track of
your positive progress is justas important. Think about if you
have a goal of saving 25,000 Ina year, and you track your
expenses every day, you cancelebrate the little wins along
(07:45):
the way. For example, if you'refor go, an expensive dinner out
and instead cook food at hometracking expenses help you see
the impact of that decision inregards to your savings goal.
Additionally, tracking yourprogress helps keep you
motivated on the way to yourgoals. Whether you're wanting to
save 25,000 or you're trying topay off 25,000 of debt, it
(08:09):
doesn't matter. It's the samething, you're doing the same
thing. And if you pay off thefirst credit card of 5000. And
if you're tracking it and youknow that happened, you reached
a milestone in you can spendlittle money not much to
celebrate keeping your financesorganized throughout my life, my
(08:32):
dad had a saying it's easier tokeep clean than to make clean.
What he means is that in anyarea of life, it is easier to
stay organized than it is toorganize a man it's a messy
financial situation. And thissand has guided me throughout my
life. In short, this organizedfinances lead to financial
(08:53):
problems. Whereas if you spendfive minutes logging expenses
and looking at your bank accountevery day, you're much less
likely to let anything slipthrough the cracks. That's
keeping control of yourfinancial now that's not me
personally, that's the author ofthis particular article and
proven your financial security.
(09:15):
If you go weeks or worst monthwithout checking your bank
account and logging yourexpenses into a budget, your
risk and financial financialsecurity. What if somebody
steals your debit cardinformation and start spending
your money? That's not asituation you want to find out
the hard way. And what I had issome way got my credit card
information and was buying stuffin the Netherlands. I don't know
(09:38):
how they were doing it. But Isaw these charges they didn't
make I contested it. They gotblocked and I didn't have to pay
for it. There's nothing worsethan paying for somebody else's
purchase on your credit card. Soif you look at your credit card
statement weekly, and you knowwhat charges you make, and then
(09:58):
you'll see the chart As youdidn't make and you can contest
it in, you know, your creditcard information got in the
wrong hands and you can takesteps to stop it, reducing your
financial stress, ignorance andpersonal finances anything but
bliss. I mean, we've all seenthose people who just don't seem
(10:20):
to know or care about theirspending habits. They throw
every single purchase on adifferent credit card, finance
brand new cars that they can'tafford, and that burn under a
mountain of financial stress.
All this can be avoided in twosimple steps, living on a budget
and tracking your expense daily.
You cannot do a budget if you'renot tracking your spending, if
(10:43):
you don't know how much thingscost, or how much you're
spending. Yeah, maybe you knowwhat your mortgage payment is.
But what is your electric bill?
What's your natural gas bill?
What's your water and sewerbill? What's your trash bill? Do
you know those numbers? If youtrack, those numbers will come
(11:03):
clear. What's your internetcosts, what's your cell phone
costs, getting to know thedollar amounts that you're
spending is port and that's moreimportant than reducing your
spending, you got to know whereyour money is going. You got to
know how much is coming in, andhow much is going out. That's
(11:28):
why looking at your bankstatement once a week and
knowing what your balances willkeep you out of trouble. You
won't go to the grocery storeand try to buy $500 worth of
food and you only have $300 inyour checking account. It gets
denied at the cash register. Ifthat's a problem you've had,
it's probably because you arenot tracking your expenses. And
(11:53):
also tracking helps you findmore ways to save money. One of
the best parts about trackingexpenses that you're likely to
find wasteful expenses you caneliminate. For example, on
multiple occasions, we hadfriends tell us that they start
digitally tracking theirexpenses. They discovered they
were paying for onlinesubscriptions they forgotten
about. And that's just oneexample. And in addition to
(12:15):
unused subscriptions, you'reprobably find other areas of
financial way so you caneliminate when you do so it
opened up the opportunity toredirect the money into savings
or toward your debt. And myexperience, my wife and I are
altered consistent abouttracking our expenses daily, we
save at least one to $200 morethan the months when we are a
(12:38):
little lazy. So what he's tryingto say there is when they track
and keep aware of theirspending, they tend to reduce
their spending. One area that Ijust discovered is I cleaned out
my garage. I know this doesn'tmake much sense. But it cleaned
out my garage clean out mytoolbox, I cleaned out the the
closet in my garage, and I foundduplicates of things that I
(13:02):
bought in the past, likecleaning soap for the car,
rubbing compounds, oils, I mean,I got enough stuff that instead
of just running to the store andbuying it that because I think I
need it, I check my closet firstuse up what I have, before I buy
(13:23):
anything else. Same thing withmy weed control spray, I got
multiple containers of thatwhich I don't need. So it's a
matter of not only tracking yourspending, but know what you got
in inventory in your garage, andthings that you buy, maybe once
a year, which makes sure youdon't have that extra bottle
(13:45):
that you bought and forgottenabout them, which is reducing
impulse spending. If you'regonna buy something that costs
more than $100, you should thinkdo you really need it? Do I need
to buy it? There are a habit mycase? Do I need to buy it or
tried looked forward? See if Ialready have it? Oh, I already
have it. I don't need to go tothe store. I saved the trip. Not
(14:05):
only did I save the money onthat item I didn't have to buy I
saved the gas and wear and tearon my car for I'm not going to
the store avoiding debt. I don'tthink it's a secret that there's
I hear that to be the budget.
We're not fans of debt. That'sjust the name of the website
that I'm referring to be thebudget. To be honest, I never
met anyone that loves paying aninterest or making monthly debt
(14:28):
payments. Sure they love the carthey financed with an expensive
bag they put on a credit card.
But if you ask them if they lovemaking payments on it, I can
almost guarantee they'll say no.
For that reason tracking yourexpenses can be a powerful
motivator to steer clear ofthat. When you're on not when
you're in debt and not trackingyour day to day expenses. It's
(14:49):
easy to let them on a dateyou're paying each month slip
through the cracks on notice.
But once you start trackingevery dollar that leaves your
bank account, it will start toadd up the debt payments, and it
can be eye opening. And that'sone of the first steps of
getting out of debt is get allyour credit card statements
together, because you got toknow who you owe, what's the
(15:13):
monthly minimum payment, when'sthe due date, what's the rate of
interest, at least those fourthings for all your debt, and
put that in order, he shouldhave credit cards in one pile,
car loans and a pile, Home Loansand a pile, personal loans and a
pile, payday loan and a pile.
Because if you have a debtproblem, you need to know which
(15:37):
debt you're gonna pay downfirst, which debt to get rid of
first, while the one with thehighest rate of interest is
probably the best one to get ridof first, and 10 keeps you
focused. Every time you sign inyour bank account and start
logging your expenses. If itonly takes a couple of minutes,
(15:57):
you're making a conscious choiceto focus on the well being of
your financial situation. Andthis small consistent action can
lead to powerful results. Thinkabout if your focus your energy
every day, for the next year onsaving more money, how much do
you think he could say? Ifyou're focused on getting out of
debt? How much do you think youcould pay it all off? Tracking
(16:19):
expenses seem like aninsignificant task, but is a
daily trigger for you to refocuson your goals and keep getting
better. So those are the reasonswhy you should be tracking. But
how do you track that articledidn't mention anything about
how you track your expenses?
(16:42):
Well, youcan do it mainly pencil on paper
and write everything down.
That's better than nothing. ButI say if you have a computer at
home, let's use it. He spend themoney for it, instead of playing
games on it. Get yourself anapplication or an app that you
can enter your information in.
And it's gotten to be able togenerate a report that you can
(17:09):
use to curate your first budget.
And you can use to update yourbudget every month thereafter.
Now you don't have to pay abunch of money. There are apps
out there that will do tracking,it'll do your budgeting, and it
(17:29):
does a whole lot of other stuff.
But it's 14 or $15 a month.
There's apps out there thatmaybe 20 or $30 a month, and
there's apps out there that arefree. Use what you can afford.
If you got a debt problem, youdon't want to be paying a
monthly fee for anything, theapp I use. And what you're
(17:53):
looking for is something torecord, which used to be called
a check register. Beforecomputers, people would go in
open a bank account yourchecking account, that give you
a register, you'd write in whatyour first deposit was. And
that's your balance. And thenevery time you wrote a check, or
(18:16):
used the ATM, or used your debitcard, you subtracted then when
you made another deposit, youadd add it, that's called a
check register, he can do thatfor your checking account, he
can do a register for yoursavings account, he can do a
register for your credit cards,these apps are set up so when
(18:40):
you set them up, you tell it's achecking account, you tell it's
a savings account, you tell it'sa credit card, so when you enter
things in there and knows how totreat it, whenever you and enter
something in your checkingaccount. And when you pay
something, it's gonna subtractit. If you charge something on a
(19:02):
credit card, when you enter thatin there, it's gonna add it to
it, but it's gonna be a negativebalance. Because you owe the
money on a credit card. When youmake a payment, that's gonna be
a positive balance because youreduce the balance. So they're
all set up to take care of thatfor you. Also, they're set up
(19:24):
with all the categories inthere. So you don't have to
invent your own categories. Hedoes look at the list and use
what's there. He got to beconsistent on the categories you
use. But they make that easybecause once you go in and say
(19:45):
enter your mortgage payment thefirst time okay, you put in who
you're paying, you put in $1amount, you talent category,
mortgage loan, mortgage payment,and the dollar amount. The next
time you type in that Same nameis gonna pop up in the category,
it's gonna be there for you.
Same thing with your naturalgas, your water and sewer, your
phone bill. All those thingsonce you enter it the first
(20:11):
time, the second time you enterit. Once you start typing in the
name, it's kind of pop up, heslept on it and it was going to
have the right category. Whatyou need to be aware of, if you
buy gas at the same place you doyour grocery shopping, you need
to split out gas as different.
In my case I shop at Kroger andoccasionally I get Kroger,
(20:36):
Kroger, fuel or gasoline. Sowhen I get the gas, I named that
Kroger fuel. And when I just getgroceries, I just say Kroger. So
when I start typing in Kroger,they both pop up, I select the
one that I did groceries isKroger, put the dollar amount,
change the date, I'm all done,he can take this one step
(21:01):
farther. Everything that you payevery each and every month, such
as your mortgage payment, yourutilities, car payments, you pay
them every month, once a month,you can set that up as being a
re occurring entry. And you canset it up to appear in a list
(21:24):
three to five days before youactually pay it. That way one is
gone, you got to be aware it'scoming up and it's going to be
due. And you can make sure youhave money to cover it, which
you should always be worriedabout that. And if it changed,
like utilities might change fromwinter to summer, you can you
(21:46):
know that set amount and thereoccurring is always going to
be the same. But you can alwaysupdate that change to date and
boom, you're done. Handlingtakes a few seconds to enter a
transaction that way. And itwill remind you, oops i Man I'm
my electric bills come due Ihadn't paid that yet. And you
can go and pay it. Personally, Iwant in to my electric company,
(22:09):
my natural gas company, my phonecompany, and I'm sure
everybody's doing the samething. And I set it up through
their website to be an automaticpayment. So they usually send me
a notice before it's due, I knowit's coming up and I noticed can
pay and I don't have to do it, Ijust need to when it hits my
(22:31):
bank account, go to thatrecurring entry from my list,
change today, change the dollaramount, hit OK or hit enter and
it's in my check register. Soit's not that difficult. Once
you do it for a while, once youlearn the program that you're
using. And the program I use islike less than $10. Here's like
(22:55):
$9.95 a year, I don't doanything extra, I manually enter
everything. I don't importthings in from my checking
account or import things in fromthe credit card statement, I
manually enter. Because if youimport it, you're losing the
(23:16):
value of manually doing it. Andyou will lose track of your
spending. Because it's doing itfor you to manually do it, and
you keep track of your spending.
So that's what tracking is allabout. I'll be back in one
moment with my final thoughtsare the articles I refer to in
(23:36):
my episodes, have a link in myshow notes. If you're interested
in checking out the softwarethat I personally use to get my
demo control. It's in my shownotes under shop financial, you
need to copy and paste the link,and it'll take you to the
website. Any questions you canjust contact me through that
(23:59):
particular website.
If you value this podcast and Ilike to make a contribution, I
had a contribution link in myshow notes also, give whatever
you feel is appropriate for theinformation I am providing. I
thank everyone for listening tomy podcast. As I said earlier,
(24:23):
tracking is the first step intocreating your budget. And why do
I say that? Because once you'vetracked for a minimum of 30
days, you're ready to createyour first budget. And this is
the easiest way I've figured outto do so. Now if you would just
get a app that does budgetingand that's all it does. It's
(24:48):
gonna ask you for numbers. Wellwhat numbers you're gonna use
where you got to go in yourchecking account and you're
gonna Okay well my know mymortgage. I know my car payment.
I know I don't really know, youknow, things change my utility
bills are all over the place, Idon't know what number to put
(25:09):
in, I just fudge a number, andyou work on it forever in, you
start putting your actualnumbers in there and you're
nowhere close and you give upand your budgeting is for the
birds that don't work. I don'tknow what these people are
talking about. But do it thisway, do your tracking first is
(25:31):
got the categories for you. Nowthe categories are gonna be in
alphabetical order. So you mightwant to get your third first 30
days worth of information inthere. And it's important and
you're consistent on yourcategories, so that you can have
(25:52):
good financial information downthe road. So let's start, you
get the app today, it's themiddle of the month, do I start
the beginning of this month, Istart today, go forward, that we
want to get our debt on thecontrol, you need to do it
sooner than later. Let's say Idon't want to go for 30 days,
(26:16):
because of the move on to themilliwatt. You know, it's kind
of pick up most of everything.
But let's start this way, goback one month. So if you're in
the middle of a month, go backto the previous month, the first
day of the month, you go and thefirst thing you should be
entering is your checkingaccount, if you want to start to
get a hang of it, maybe yoursavings account. But if you
(26:39):
don't have a savings account orvery little activity, maybe you
can get the opening balance inthere, a couple deductions may
be a deposit and get the hang ofwhat's going on. But then you
need to focus on your checkingaccount first, then each and
every credit card that you havea balance on. So we're going
(27:02):
back to the first day of theprevious month, you go into your
online bank account, you go back30 days, hopefully you can go
back that far. If not go back asfar as you can, that your online
checking account will allow youI'm pretty sure you can go back
45 days, maybe not. And youstart with what's the balance in
(27:24):
your checking account, you gotto start somewhere because it's
not a new checking account. Soyou had a balance in there. So
go back, put the balance in andcall it opening balance ever
enter after that everytransactions that happened from
the first of the previous monthto the current date, all your
(27:45):
deposits, all your deductionsand dye would just go in order
from what's on there. If you'rein a Windows machine, you can
drag it if you if you know howto split your screen, good for
you. But he can drag your screenover and put it in one half and
put your online account and theother half the screen. So ones
(28:07):
on one side ones on the other.
And you just go down the lineand you manually enter
everything. And you're checkingyour register or this app should
look identical, pretty muchdollar wide. Number wise to your
checking account. If you don'tknow how to do the split screen
(28:30):
do a Google thing on Windowssplitscreen windows and the
windows 11. A if you go up tothe little square box and click
on it, it will allow you to dois click those give you options
of sizes and stuff to do splitscreen, it works great. And once
I learned how to do that, I useit all the time, and enter
(28:51):
everything in there from thatdate down. And when you get to
the current date, whatever yourbalances in that checking
account is should be the balanceyou have on your app. If the
balance is different, you gottago through and find it, find the
air. That's the why that's howyou know you have everything
entered correctly. Remember, youcan't fudge the number because
(29:17):
it's good information in goodinformation out bad information
and crap information out and asnot gonna do you much good. So
let's reconcile your AP bankregister to your online bank.
From that point forward. You cando it as you want. Sometimes, if
(29:41):
I write something and I knowit's gonna come out three days
from now, I enter it today, eventhough it may not clear the bank
for a couple days or so. But Ijust keep changing the date
until it clears the bank. I usethe same day as the bank date
that way everything lines upeasier. If you have a business,
(30:03):
you cannot do that the date youuse is the date you write that
check, because that's the date,you can take the deduction, not
the date, it clears the bank foryou, those of you that may be a
business, who are changing yourdates to match the bank, that's
a no, no. And it could cost yousome extra tax dollars by doing
(30:26):
that, to this warning for that,once you get your checking
account, and everything's allblind, do a report by category
from the beginning of that monthto the end of that month, do
report by category and see whatyou get. Now it's gonna be in
alphabetical order. But lookdown through those categories is
(30:46):
there anything seemed kind ofodd out of place too much,
whatever. If so investigate it,maybe you made an entry error,
maybe you post something wrongto a category. And it's being
overstated. And another categoryis being understated. So look
for those type errors. And onceyou get all that done, do each
(31:08):
credit card exactly the sameway. And once you have
everything done, entered to thecurrent date, we want to create
a report from the previous monthfrom the beginning to the end of
the month. All accounts, allcategories. That way, you can
see exactly, and do it totals bycategory. And you can see how
(31:33):
much you spent each month bycategory. Now when you set up
your budget, we're going to putmultiple categories together. So
we're gonna have, and we'regoing to talk more about this
later, but you got to havehousing, and then within housing
and have mortgage payment,utilities, etc, your printout
(31:56):
that you get from your app isnot going to match that once you
get comfortable with everything,and maybe a couple months down
the road, get comfortable. Andonce you get your budget set up,
go in and set up the way youlike it, your categories grouped
together the way you want them.
So this one and now if they wereyou might be you might be doing
(32:16):
housing, and it might be onehalfway down the page one on the
second page. One is all over theplace, and you might miss him or
fruit and that kind of thing.
group them together. By the samegroupings, you have your budget,
whether you need to come up withsome type of name system where
(32:40):
you name the categories, like hone, H for housing, then 12345,
h one, H two, h three, T fortransportation, t 12345. That
way, every time you print outthat they're gonna be grouped
(33:00):
together the same way becausethey're grouped alphabetically.
And then numerically, all theH's will be together, all the
T's to be at or all the s willbe gathered C for credit card,
whatever the case, come up witha system for you. I did a system
for me. But I wouldn't do it thesame way twice. That's why I'm
(33:23):
not telling you how to do it. Ihave older podcasts where I did
make something that works foryou, that's easy for you to
remember. Because if you have tohave a new vendor, or you went
to a new store, and you didshopping, and you're shopping
for, say household items is likes three, s three, Sam three, you
(33:49):
can just type in S three and itpops right up and then or there
it is and you put in your dollaramount, then the next time and
always will be the same unlessyou change categories. That's
all it's to it. It's importantto
keep aware of what's coming inand out of your personal
finances. And this is the firstmajor step you're making to get
(34:16):
your debt under control.
Hello, I'm your host, Mr. Chuck, a retired
accountant turned truck driver,I reduce my debt in a relatively
short period of time, debtreduction to achieve financial
freedom takes commitment,confidence determination. What
is tracking? What is trackingfor personal finance? How is it
(00:25):
done to help with spendingproblems? And why should you do
tracking? Tracking is the basicsof your personal financial life.
If you're not doing tracking,that's probably one of the
primary reasons why you may havesome spending problems or debt
(00:49):
problems, which is the result ofspending more than what you
make. So what is it tracking isnothing but the operation of
recording all your income andall your expenditures that come
in and out of your savingsaccount, your checking account
and your credit card accounts.
It says a matter of dataidentifying by category where
(01:13):
your money is going and whereyour money came from. Most 99%
of the income is going to befrom your job, or from your self
employment, a side hustle orfrom a casual sale, something
Grodd sales, those type ofthings, but spending as a bigger
(01:34):
problem, tracking where yourmoney goes. So you know how much
it's going to wear is importantand to get in your personal
finances under control. And thenknowing the dollar amount that
you need to pay each and everymonth to meet your needs, that
(01:57):
you have needs. And you have oneneeds is what you need to pay in
order to live. Simply puthousing, everything related to
housing, whether you're rentingor buying a home. It's the
monthly payment, your mortgagepayment, your real estate taxes,
(02:20):
your insurance, maintenance,utilities. And I also include my
cell phone, because in the olddays, you used to have a
landline for your phone. So I'mstaying with that philosophy. So
your cell phone, charge shouldbe under housing, general
(02:40):
category. And then you havetransportation, and then you
have food, then you have pan allyour debt, your credit card
bills and savings. Those shouldall be your needs. There may be
some more for you, depending onyour situation. But those are
the main categories. Anythingelse you pay is a once whether
(03:04):
it's entertainment, streamingTV, cable TV, buying those
packages for sports, whetherit's football, basketball,
baseball, whatever sports youlike to watch, if you got to pay
extra for that, for whateverchannels that you want to
particularly watch, that's allconsidered a need. So that is
(03:27):
something that you pay for,after all your wants are taken
care of. I'm assuming if you'relistening to this podcast, you
probably have some type of debtproblem. So the first step in
that is identifying the problem,you have too much debt. Or maybe
(03:48):
you're thinking my income is notbecause I'm spending more than
what I make be have figured thatpart out. But it's not how much
you make, that you can control.
It is because of the job andwhat you do to make a living.
(04:08):
But what you need to control isthe spending of your money. He
work hard to earn your money.
It's hard to get takes a longtime. But it's so easy to get
rid of it to buy something youdon't really need. And then you
get in to a debt problem, thanksto credit cards. So you
(04:30):
identified a problem, how youfixed a problem of you have too
much debt in order to fix that.
You need to reduce yourspending. So we need to know how
much every month do I pay for myneeds, housing, transportation,
(04:51):
food, credit card bills, and alittle bit of savings in theory,
and how much I have left afterthat and order to keep your
spending under control so youdon't overspend on your wants,
and then that causes a problemfor your paying for your needs.
(05:11):
So that's why you're gone totrack. And here's the 10 reasons
why you should track yourexpenses from the professionals.
Do you track your expenses on adaily basis on for many people,
the idea of logging everytransaction into a personal
budget sounds like the world'smost boring and significant
task. But truthfully, there's anumber of critical benefits. So
(05:35):
why should you track yourexpenses, and short the main
reason you should track yourexpenses is identify and
eliminate wasteful spendinghabits, and your financial life.
However, consistently, trackingyour expenses will help you
maintain control of yourfinances, and promote better
financial habits like saving andinvesting. Honestly, there's
(05:59):
quite a few benefits that keeptrack of your spending behavior.
Maintaining financial control isthe first one. If it comes to
personal finances, being out ofcontrol is not something anyone
would strive for. There'snothing financially worse than
feeling like you don't have anyidea what's going on with your
(06:19):
money. The good news is when youmake an effort to record every
financial transaction you make,you are essentially taking the
reins on everything andeverything, anything and
everything involving your money.
At any one time, you'll knowexactly how much money is
sitting in your bank account,and how much you can spend. And
(06:40):
in other words, when you trackyour expenses, you take complete
control of your finances. Numbertwo, holding yourself
accountable. If you have anyplans on saving, investing,
getting out of debt or buildingwealth, what is holding you
accountable. I mean, we can allset financial goals and have
financial dreams. But if you'renot tracking your expenses,
(07:02):
there's nothing to hold youaccountable to make you when you
make a bad financial decision.
Tracking your expenses hold youaccountable for your future
financial goals. And in the longrun, that can be the difference
between broke and wealthy.
Tracking your financialprogress. In addition to holding
yourself accountabletracking your expenses on a day
(07:22):
to day basis, helps you see yourprogress on the road to
financial goals. Sure, there maybe times you need to answer
yourself for a bad financialdecision. But keeping track of
your positive progress is justas important. Think about if you
have a goal of saving 25,000 Ina year, and you track your
expenses every day, you cancelebrate the little wins along
(07:45):
the way. For example, if you'refor go, an expensive dinner out
and instead cook food at hometracking expenses help you see
the impact of that decision inregards to your savings goal.
Additionally, tracking yourprogress helps keep you
motivated on the way to yourgoals. Whether you're wanting to
save 25,000 or you're trying topay off 25,000 of debt, it
(08:09):
doesn't matter. It's the samething, you're doing the same
thing. And if you pay off thefirst credit card of 5000. And
if you're tracking it and youknow that happened, you reached
a milestone in you can spendlittle money not much to
celebrate keeping your financesorganized throughout my life, my
(08:32):
dad had a saying it's easier tokeep clean than to make clean.
What he means is that in anyarea of life, it is easier to
stay organized than it is toorganize a man it's a messy
financial situation. And thissand has guided me throughout my
life. In short, this organizedfinances lead to financial
(08:53):
problems. Whereas if you spendfive minutes logging expenses
and looking at your bank accountevery day, you're much less
likely to let anything slipthrough the cracks. That's
keeping control of yourfinancial now that's not me
personally, that's the author ofthis particular article and
proven your financial security.
(09:15):
If you go weeks or worst monthwithout checking your bank
account and logging yourexpenses into a budget, your
risk and financial financialsecurity. What if somebody
steals your debit cardinformation and start spending
your money? That's not asituation you want to find out
the hard way. And what I had issome way got my credit card
information and was buying stuffin the Netherlands. I don't know
(09:38):
how they were doing it. But Isaw these charges they didn't
make I contested it. They gotblocked and I didn't have to pay
for it. There's nothing worsethan paying for somebody else's
purchase on your credit card. Soif you look at your credit card
statement weekly, and you knowwhat charges you make, and then
(09:58):
you'll see the chart As youdidn't make and you can contest
it in, you know, your creditcard information got in the
wrong hands and you can takesteps to stop it, reducing your
financial stress, ignorance andpersonal finances anything but
bliss. I mean, we've all seenthose people who just don't seem
(10:20):
to know or care about theirspending habits. They throw
every single purchase on adifferent credit card, finance
brand new cars that they can'tafford, and that burn under a
mountain of financial stress.
All this can be avoided in twosimple steps, living on a budget
and tracking your expense daily.
You cannot do a budget if you'renot tracking your spending, if
(10:43):
you don't know how much thingscost, or how much you're
spending. Yeah, maybe you knowwhat your mortgage payment is.
But what is your electric bill?
What's your natural gas bill?
What's your water and sewerbill? What's your trash bill? Do
you know those numbers? If youtrack, those numbers will come
(11:03):
clear. What's your internetcosts, what's your cell phone
costs, getting to know thedollar amounts that you're
spending is port and that's moreimportant than reducing your
spending, you got to know whereyour money is going. You got to
know how much is coming in, andhow much is going out. That's
(11:28):
why looking at your bankstatement once a week and
knowing what your balances willkeep you out of trouble. You
won't go to the grocery storeand try to buy $500 worth of
food and you only have $300 inyour checking account. It gets
denied at the cash register. Ifthat's a problem you've had,
it's probably because you arenot tracking your expenses. And
(11:53):
also tracking helps you findmore ways to save money. One of
the best parts about trackingexpenses that you're likely to
find wasteful expenses you caneliminate. For example, on
multiple occasions, we hadfriends tell us that they start
digitally tracking theirexpenses. They discovered they
were paying for onlinesubscriptions they forgotten
about. And that's just oneexample. And in addition to
(12:15):
unused subscriptions, you'reprobably find other areas of
financial way so you caneliminate when you do so it
opened up the opportunity toredirect the money into savings
or toward your debt. And myexperience, my wife and I are
altered consistent abouttracking our expenses daily, we
save at least one to $200 morethan the months when we are a
(12:38):
little lazy. So what he's tryingto say there is when they track
and keep aware of theirspending, they tend to reduce
their spending. One area that Ijust discovered is I cleaned out
my garage. I know this doesn'tmake much sense. But it cleaned
out my garage clean out mytoolbox, I cleaned out the the
closet in my garage, and I foundduplicates of things that I
(13:02):
bought in the past, likecleaning soap for the car,
rubbing compounds, oils, I mean,I got enough stuff that instead
of just running to the store andbuying it that because I think I
need it, I check my closet firstuse up what I have, before I buy
(13:23):
anything else. Same thing withmy weed control spray, I got
multiple containers of thatwhich I don't need. So it's a
matter of not only tracking yourspending, but know what you got
in inventory in your garage, andthings that you buy, maybe once
a year, which makes sure youdon't have that extra bottle
(13:45):
that you bought and forgottenabout them, which is reducing
impulse spending. If you'regonna buy something that costs
more than $100, you should thinkdo you really need it? Do I need
to buy it? There are a habit mycase? Do I need to buy it or
tried looked forward? See if Ialready have it? Oh, I already
have it. I don't need to go tothe store. I saved the trip. Not
(14:05):
only did I save the money onthat item I didn't have to buy I
saved the gas and wear and tearon my car for I'm not going to
the store avoiding debt. I don'tthink it's a secret that there's
I hear that to be the budget.
We're not fans of debt. That'sjust the name of the website
that I'm referring to be thebudget. To be honest, I never
met anyone that loves paying aninterest or making monthly debt
(14:28):
payments. Sure they love the carthey financed with an expensive
bag they put on a credit card.
But if you ask them if they lovemaking payments on it, I can
almost guarantee they'll say no.
For that reason tracking yourexpenses can be a powerful
motivator to steer clear ofthat. When you're on not when
you're in debt and not trackingyour day to day expenses. It's
(14:49):
easy to let them on a dateyou're paying each month slip
through the cracks on notice.
But once you start trackingevery dollar that leaves your
bank account, it will start toadd up the debt payments, and it
can be eye opening. And that'sone of the first steps of
getting out of debt is get allyour credit card statements
together, because you got toknow who you owe, what's the
(15:13):
monthly minimum payment, when'sthe due date, what's the rate of
interest, at least those fourthings for all your debt, and
put that in order, he shouldhave credit cards in one pile,
car loans and a pile, Home Loansand a pile, personal loans and a
pile, payday loan and a pile.
Because if you have a debtproblem, you need to know which
(15:37):
debt you're gonna pay downfirst, which debt to get rid of
first, while the one with thehighest rate of interest is
probably the best one to get ridof first, and 10 keeps you
focused. Every time you sign inyour bank account and start
logging your expenses. If itonly takes a couple of minutes,
(15:57):
you're making a conscious choiceto focus on the well being of
your financial situation. Andthis small consistent action can
lead to powerful results. Thinkabout if your focus your energy
every day, for the next year onsaving more money, how much do
you think he could say? Ifyou're focused on getting out of
debt? How much do you think youcould pay it all off? Tracking
(16:19):
expenses seem like aninsignificant task, but is a
daily trigger for you to refocuson your goals and keep getting
better. So those are the reasonswhy you should be tracking. But
how do you track that articledidn't mention anything about
how you track your expenses?
(16:42):
Well, youcan do it mainly pencil on paper
and write everything down.
That's better than nothing. ButI say if you have a computer at
home, let's use it. He spend themoney for it, instead of playing
games on it. Get yourself anapplication or an app that you
can enter your information in.
And it's gotten to be able togenerate a report that you can
(17:09):
use to curate your first budget.
And you can use to update yourbudget every month thereafter.
Now you don't have to pay abunch of money. There are apps
out there that will do tracking,it'll do your budgeting, and it
(17:29):
does a whole lot of other stuff.
But it's 14 or $15 a month.
There's apps out there thatmaybe 20 or $30 a month, and
there's apps out there that arefree. Use what you can afford.
If you got a debt problem, youdon't want to be paying a
monthly fee for anything, theapp I use. And what you're
(17:53):
looking for is something torecord, which used to be called
a check register. Beforecomputers, people would go in
open a bank account yourchecking account, that give you
a register, you'd write in whatyour first deposit was. And
that's your balance. And thenevery time you wrote a check, or
(18:16):
used the ATM, or used your debitcard, you subtracted then when
you made another deposit, youadd add it, that's called a
check register, he can do thatfor your checking account, he
can do a register for yoursavings account, he can do a
register for your credit cards,these apps are set up so when
(18:40):
you set them up, you tell it's achecking account, you tell it's
a savings account, you tell it'sa credit card, so when you enter
things in there and knows how totreat it, whenever you and enter
something in your checkingaccount. And when you pay
something, it's gonna subtractit. If you charge something on a
(19:02):
credit card, when you enter thatin there, it's gonna add it to
it, but it's gonna be a negativebalance. Because you owe the
money on a credit card. When youmake a payment, that's gonna be
a positive balance because youreduce the balance. So they're
all set up to take care of thatfor you. Also, they're set up
(19:24):
with all the categories inthere. So you don't have to
invent your own categories. Hedoes look at the list and use
what's there. He got to beconsistent on the categories you
use. But they make that easybecause once you go in and say
(19:45):
enter your mortgage payment thefirst time okay, you put in who
you're paying, you put in $1amount, you talent category,
mortgage loan, mortgage payment,and the dollar amount. The next
time you type in that Same nameis gonna pop up in the category,
it's gonna be there for you.
Same thing with your naturalgas, your water and sewer, your
phone bill. All those thingsonce you enter it the first
(20:11):
time, the second time you enterit. Once you start typing in the
name, it's kind of pop up, heslept on it and it was going to
have the right category. Whatyou need to be aware of, if you
buy gas at the same place you doyour grocery shopping, you need
to split out gas as different.
In my case I shop at Kroger andoccasionally I get Kroger,
(20:36):
Kroger, fuel or gasoline. Sowhen I get the gas, I named that
Kroger fuel. And when I just getgroceries, I just say Kroger. So
when I start typing in Kroger,they both pop up, I select the
one that I did groceries isKroger, put the dollar amount,
change the date, I'm all done,he can take this one step
(21:01):
farther. Everything that you payevery each and every month, such
as your mortgage payment, yourutilities, car payments, you pay
them every month, once a month,you can set that up as being a
re occurring entry. And you canset it up to appear in a list
(21:24):
three to five days before youactually pay it. That way one is
gone, you got to be aware it'scoming up and it's going to be
due. And you can make sure youhave money to cover it, which
you should always be worriedabout that. And if it changed,
like utilities might change fromwinter to summer, you can you
(21:46):
know that set amount and thereoccurring is always going to
be the same. But you can alwaysupdate that change to date and
boom, you're done. Handlingtakes a few seconds to enter a
transaction that way. And itwill remind you, oops i Man I'm
my electric bills come due Ihadn't paid that yet. And you
can go and pay it. Personally, Iwant in to my electric company,
(22:09):
my natural gas company, my phonecompany, and I'm sure
everybody's doing the samething. And I set it up through
their website to be an automaticpayment. So they usually send me
a notice before it's due, I knowit's coming up and I noticed can
pay and I don't have to do it, Ijust need to when it hits my
(22:31):
bank account, go to thatrecurring entry from my list,
change today, change the dollaramount, hit OK or hit enter and
it's in my check register. Soit's not that difficult. Once
you do it for a while, once youlearn the program that you're
using. And the program I use islike less than $10. Here's like
(22:55):
$9.95 a year, I don't doanything extra, I manually enter
everything. I don't importthings in from my checking
account or import things in fromthe credit card statement, I
manually enter. Because if youimport it, you're losing the
(23:16):
value of manually doing it. Andyou will lose track of your
spending. Because it's doing itfor you to manually do it, and
you keep track of your spending.
So that's what tracking is allabout. I'll be back in one
moment with my final thoughtsare the articles I refer to in
(23:36):
my episodes, have a link in myshow notes. If you're interested
in checking out the softwarethat I personally use to get my
demo control. It's in my shownotes under shop financial, you
need to copy and paste the link,and it'll take you to the
website. Any questions you canjust contact me through that
(23:59):
particular website.
If you value this podcast and Ilike to make a contribution, I
had a contribution link in myshow notes also, give whatever
you feel is appropriate for theinformation I am providing. I
thank everyone for listening tomy podcast. As I said earlier,
(24:23):
tracking is the first step intocreating your budget. And why do
I say that? Because once you'vetracked for a minimum of 30
days, you're ready to createyour first budget. And this is
the easiest way I've figured outto do so. Now if you would just
get a app that does budgetingand that's all it does. It's
(24:48):
gonna ask you for numbers. Wellwhat numbers you're gonna use
where you got to go in yourchecking account and you're
gonna Okay well my know mymortgage. I know my car payment.
I know I don't really know, youknow, things change my utility
bills are all over the place, Idon't know what number to put
(25:09):
in, I just fudge a number, andyou work on it forever in, you
start putting your actualnumbers in there and you're
nowhere close and you give upand your budgeting is for the
birds that don't work. I don'tknow what these people are
talking about. But do it thisway, do your tracking first is
(25:31):
got the categories for you. Nowthe categories are gonna be in
alphabetical order. So you mightwant to get your third first 30
days worth of information inthere. And it's important and
you're consistent on yourcategories, so that you can have
(25:52):
good financial information downthe road. So let's start, you
get the app today, it's themiddle of the month, do I start
the beginning of this month, Istart today, go forward, that we
want to get our debt on thecontrol, you need to do it
sooner than later. Let's say Idon't want to go for 30 days,
(26:16):
because of the move on to themilliwatt. You know, it's kind
of pick up most of everything.
But let's start this way, goback one month. So if you're in
the middle of a month, go backto the previous month, the first
day of the month, you go and thefirst thing you should be
entering is your checkingaccount, if you want to start to
get a hang of it, maybe yoursavings account. But if you
(26:39):
don't have a savings account orvery little activity, maybe you
can get the opening balance inthere, a couple deductions may
be a deposit and get the hang ofwhat's going on. But then you
need to focus on your checkingaccount first, then each and
every credit card that you havea balance on. So we're going
(27:02):
back to the first day of theprevious month, you go into your
online bank account, you go back30 days, hopefully you can go
back that far. If not go back asfar as you can, that your online
checking account will allow youI'm pretty sure you can go back
45 days, maybe not. And youstart with what's the balance in
(27:24):
your checking account, you gotto start somewhere because it's
not a new checking account. Soyou had a balance in there. So
go back, put the balance in andcall it opening balance ever
enter after that everytransactions that happened from
the first of the previous monthto the current date, all your
(27:45):
deposits, all your deductionsand dye would just go in order
from what's on there. If you'rein a Windows machine, you can
drag it if you if you know howto split your screen, good for
you. But he can drag your screenover and put it in one half and
put your online account and theother half the screen. So ones
(28:07):
on one side ones on the other.
And you just go down the lineand you manually enter
everything. And you're checkingyour register or this app should
look identical, pretty muchdollar wide. Number wise to your
checking account. If you don'tknow how to do the split screen
(28:30):
do a Google thing on Windowssplitscreen windows and the
windows 11. A if you go up tothe little square box and click
on it, it will allow you to dois click those give you options
of sizes and stuff to do splitscreen, it works great. And once
I learned how to do that, I useit all the time, and enter
(28:51):
everything in there from thatdate down. And when you get to
the current date, whatever yourbalances in that checking
account is should be the balanceyou have on your app. If the
balance is different, you gottago through and find it, find the
air. That's the why that's howyou know you have everything
entered correctly. Remember, youcan't fudge the number because
(29:17):
it's good information in goodinformation out bad information
and crap information out and asnot gonna do you much good. So
let's reconcile your AP bankregister to your online bank.
From that point forward. You cando it as you want. Sometimes, if
(29:41):
I write something and I knowit's gonna come out three days
from now, I enter it today, eventhough it may not clear the bank
for a couple days or so. But Ijust keep changing the date
until it clears the bank. I usethe same day as the bank date
that way everything lines upeasier. If you have a business,
(30:03):
you cannot do that the date youuse is the date you write that
check, because that's the date,you can take the deduction, not
the date, it clears the bank foryou, those of you that may be a
business, who are changing yourdates to match the bank, that's
a no, no. And it could cost yousome extra tax dollars by doing
(30:26):
that, to this warning for that,once you get your checking
account, and everything's allblind, do a report by category
from the beginning of that monthto the end of that month, do
report by category and see whatyou get. Now it's gonna be in
alphabetical order. But lookdown through those categories is
(30:46):
there anything seemed kind ofodd out of place too much,
whatever. If so investigate it,maybe you made an entry error,
maybe you post something wrongto a category. And it's being
overstated. And another categoryis being understated. So look
for those type errors. And onceyou get all that done, do each
(31:08):
credit card exactly the sameway. And once you have
everything done, entered to thecurrent date, we want to create
a report from the previous monthfrom the beginning to the end of
the month. All accounts, allcategories. That way, you can
see exactly, and do it totals bycategory. And you can see how
(31:33):
much you spent each month bycategory. Now when you set up
your budget, we're going to putmultiple categories together. So
we're gonna have, and we'regoing to talk more about this
later, but you got to havehousing, and then within housing
and have mortgage payment,utilities, etc, your printout
(31:56):
that you get from your app isnot going to match that once you
get comfortable with everything,and maybe a couple months down
the road, get comfortable. Andonce you get your budget set up,
go in and set up the way youlike it, your categories grouped
together the way you want them.
So this one and now if they wereyou might be you might be doing
(32:16):
housing, and it might be onehalfway down the page one on the
second page. One is all over theplace, and you might miss him or
fruit and that kind of thing.
group them together. By the samegroupings, you have your budget,
whether you need to come up withsome type of name system where
(32:40):
you name the categories, like hone, H for housing, then 12345,
h one, H two, h three, T fortransportation, t 12345. That
way, every time you print outthat they're gonna be grouped
(33:00):
together the same way becausethey're grouped alphabetically.
And then numerically, all theH's will be together, all the
T's to be at or all the s willbe gathered C for credit card,
whatever the case, come up witha system for you. I did a system
for me. But I wouldn't do it thesame way twice. That's why I'm
(33:23):
not telling you how to do it. Ihave older podcasts where I did
make something that works foryou, that's easy for you to
remember. Because if you have tohave a new vendor, or you went
to a new store, and you didshopping, and you're shopping
for, say household items is likes three, s three, Sam three, you
(33:49):
can just type in S three and itpops right up and then or there
it is and you put in your dollaramount, then the next time and
always will be the same unlessyou change categories. That's
all it's to it. It's importantto
keep aware of what's coming inand out of your personal
finances. And this is the firstmajor step you're making to get
(34:16):
your debt under control.
Popular Podcasts
Stuff You Should Know
If you've ever wanted to know about champagne, satanism, the Stonewall Uprising, chaos theory, LSD, El Nino, true crime and Rosa Parks, then look no further. Josh and Chuck have you covered.
Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations.
The Clay Travis and Buck Sexton Show
The Clay Travis and Buck Sexton Show. Clay Travis and Buck Sexton tackle the biggest stories in news, politics and current events with intelligence and humor. From the border crisis, to the madness of cancel culture and far-left missteps, Clay and Buck guide listeners through the latest headlines and hot topics with fun and entertaining conversations and opinions.