One thing you will read a lot about in personal finance blogs and articles is tracking your spending. I have to admit that I have done a pretty poor job of this over the last few years. I use Mint to track my credit cards, bank accounts, investments, and loans. It does a pretty good job of tracking all of these areas. However, I have had a number of issues and lost all of my data stored in Mint. In addition, I don’t track my cash spending. Thus, I am not getting a true picture of my spending.
My goal over the next three months (March, April, and May) is to track every penny that I spend and earn. I will post weekly updates with my spending by category. I think this is a very important step for young adults to get an understanding of where you spend your money. Once you go through this exercise, you can then create a budget for yourself and try to eliminate the unnecessary spending.
To help facilitate this process, I am going to use the iPhone application iXpenseIt to track my spending. I am sure that there are other apps for the blackberry and android phone that can help with tracking your spending. If you don’t have one of these resources available, I recommend taking a notepad and pen with you everywhere you go. That way you can track everything as soon as you spend it. Also, I created a spreadsheet for everyone to use that will help analyze your spending. At minimum, you should try to update this spreadsheet every week with all of your spending activity. If you have questions about the spreadsheet or recommendations on how to improve it, please let me know.
I am pretty sure that I will find I spend too much money on coffee, restaurants, and entertainment. But I won’t know for sure until I go through this exercise. However, it will be good to look back on this post in three months and see if I was right or if I am spending a lot in areas I didn’t realize.