The first step I took towards building financial smarts was to learn the Art of Budgeting.
Why? By tracking my daily spending and making budgets, the process helped me learn more about my horrible spending habits than ever before. I believe this simple awareness gives me the knowledge to plan my goals, which is to cut down on spending in various areas, hence freeing up extra money for savings or investments.
Step 1: Recording My Expenditure
The tedious part about budgeting was the initial hurdle of taking down every single amount I spent, from the 70 cents on the daily paper I read during lunches to the $10 on the occasional pint of beer. Friends mocked me for being excessively meticulous, “Couldn’t you just spend less in general?” Perhaps. But I believe proper financial tracking nurtures some form of discipline which admittedly, I don’t have. And if I didn’t track my spending, I’d be throwing my money at all sorts of frivolous things like drinks. Recording my expenses acts as a good wake-up call.
Tip: I suggest using a small portable notebook that you can carry in your handbag or pocket, or even a piece of notepaper that you can slip into the bill compartment of your wallet, so it’s always within easy reach. Personally, I record all my expenses in the notepad on my mobile phone.
Here’s an example of a daily expense log:
6/7: lunch $5.20 + dinner $19.90 + drinks $10.20
It’s as simple as that.
Because I tend to forget, I try to log my expenses immediately. In fact, it has almost become reflex to whip out my phone and punch the numbers in two seconds after handing over my money.
Well, now that you have these figures, what are you going to do with them? Introducing the awesome (and free!) budgeting and expense-tracking spreadsheet: Pearbudget.
In my next post, I’ll talk about getting started with Pearbudget. It’s really easy!
2 Comments
July 12, 2007 at 1:38 pm
[...] About Budgeting 101: Tracking My Expenses [...]
July 12, 2007 at 2:20 pm
[...] like to share how easy it is to create and manage budgets in Pearbudget. Now that you know how to track your daily expenses and learnt about the different types of expenses, all that’s left to do is to create budgets [...]