Have you ever wondered exactly where your money goes? I know have a certain amount coming in each month. I know what my fixed expenses are: rent, the Internet, etc. I know how much I set aside in savings. Yet, somehow I couldn’t account for all of my money each month.
So I set out to figure exactly where my money was going. In April, I began tracking expenses. At the end of each day, I entered every expense into a simple spreadsheet. I kept my receipts to make it easier and used Google Spreadsheets so that I could access the information on the go.
Altogether, it was a huge learning experience. I realized that there were a few places in my budget where I spent much more than I thought I was spending. Now, I’m equipped with the information I need to cut my spending and improve my finances overall. Here are three key takeaways from tracking every dollar I spent for a month.
Food Can Eat Up Your Budget If You Let It
In April, I spent a whopping $250 on takeout. That’s almost $10 per day! And that doesn’t include groceries or restaurant dining. I ate most of my meals on the go and only spent about $80 on groceries (some of which went to waste, honestly).
This was bad for two reasons:
- That’s a lot of money for one person to spend on food for one month.
- Takeout food is generally less healthy than home-cooked meals.
I was paying extra for convenience and harming my health at the same time. I knew something had to change — quickly! I’m happy to say that I am now on track to spending more on groceries than on takeout. I’m preparing more meals at home and saving takeout for planned nights when I want to treat myself. Meal planning has helped a lot. At night, I simply write down what I plan to eat the following day based on ingredients I have at home. I also plan for snacks in case I get hungry between meals.
Don’t Drink Away Your Extra Cash
In April, I spent just under $70 on alcohol. This is alcohol I drink at home and doesn’t include money spent at happy hours or other drinks while going out. It’s really an unnecessary expense. Okay, a glass of wine with dinner has its benefits. But spending money on alcohol outside from socializing really isn’t worth it. Alcohol gives me a little buzz for the moment, but it’s not worth the premium price as opposed to drinking water when at home.
That’s $70 that could have been put towards additional savings or towards adding a larger cushion to my checking account (which I love to have). Now, I limit the amount of alcohol I drink at home. I stick to mainly water. Not only do I have a clearer mind, I’m saving a few extra dollars each month that will eventually add up.
Having Low Monthly Bills Helps A Lot
Despite these flops, I was still able to save over 25% of my income. That’s because I have low monthly bills aside from rent. My Internet costs $30 per month and my phone bill cost a little over $40 per month. All utilities are included in my rent. So I don’t have many monthly recurring bills outside of rent, Internet, and phone. This gives me the flexibility of having a decent amount of cash flow each month.
If you’re living paycheck to paycheck or are just unable to save as much as you would like, I highly recommend taking a look at your monthly bills. Check which bills you can eliminate completely. Do you have any subscriptions that are no longer useful? Also, check which bills you can reduce. Do you have premium cable channels you don’t watch?
Final Thoughts
Tracking expenses for a month really opened up my eyes to where my money was going. Since doing so, I’ve made some tangible changes to the way I spend money and already see a positive result in my finances.
If you’re looking to do the same, it’s easy to get started. Just list every expense you have in a simple spreadsheet at the end of each day. At the end of the month, group the expenses into categories and add them up. You’ll probably be shocked at where your money is actually going.
Aliyyah shares her thoughts and expertise about personal finance at Rich And Happy Blog. She is a twenty-something professional who graduated college debt-free and is aggressively working her way towards financial independence.