After the shopping rush of the holiday season, January’s bills can come with a side of dread. Almost two-thirds of Americans are making a financial resolution in the new year, according to a study from Fidelity. But, as with any new goal, it can be much easier said than done. One way to set yourself up for success? Tracking your spending. “Especially because we’ve been so accustomed to swiping, we don’t realize all the places we spend,” Stephanie Ruhle, NBC News Senior Business Correspondent, told TODAY. “By tracking, you see the most important things you can’t live without and things you might be (buying) on a regular basis that you don’t need.”
Why you should be tracking your spending
No matter what your financial goals are, you need to make an informed plan about how to achieve them. An easy way to get started is by simply tracking.
“A lot of people are resistant to tracking their spending, but it’s not about shame, it’s about awareness,” explained Ashley Feinstein Gerstley, money coach and founder of The Fiscal Femme. She emphasizes making observations, rather than judgments, so you can identify trends in your spending habits, or learn new things — not beat yourself up for every dollar.
How to track your spending
There are a couple of ways you can track your spending. If you want to look at your past habits, pull out your credit card and bank statements from the past couple of months — that way, you’ll get a more holistic picture of what you spend, especially for things that don’t come up all the time, Feinstein Gerstley said. Otherwise, it’s up to you. Pen and paper, a note on your phone, or an app can all be easy ways to be mindful of where your money is going.
“The goal isn’t to have the perfect recount of what our spending was, it’s more of the awareness,” Feinstein Gerstley explained.
What to do with your new knowledge
Now that you know what you are actually spending, you can prioritize the things that really matter. Tracking your spending is the foundation of building a budget that will work well. Once you can identify the trends in your spending, you can make a plan.
In the same way that experts would tell you that to optimize your health you need to know your body — you need to know your money too.
“In the same way that experts would tell you that to optimize your health you need to know your body — you need to know your money too,” Ruhle said. “I know we’ve heard a thousand times about spending too much on coffee or snacks or lunch, but when you notice over the course of a few weeks that it’s costing you a few hundred dollars, you may not want to spend that money.”
Keep the tracking party going
Now that you have your budget built, don’t stop there. Check in on your spending at least every couple of days to make sure things are going to plan.
“Life is easier when you lay in bed and eat junk food, but when you start working out and eating well and start seeing the changes, you want to keep doing it. It’s the same with tracking your spending,” Ruhle said. “We work so hard to make the money that we have. Don’t you want to optimize it? We work so hard to get it into your bank account, and once it’s there, care about it more.”
Once you find a plan that will work with your lifestyle, keeping up with it can help you achieve your financial goals.