Keeping track of all your cost is vital to determine if you are sticking to your budget. The 50 cents you spent on a pack of gum, must be recorded. All non-cash payments should be easy to track. With the Internet we can now log into our bank account, utility accounts, etc., to determine how much money we spent. However, for cash spending you should collect the receipts and/or write down on a small pad that you always have with you, how much money you are spending. You may be surprise how much money you spend each month on small items such as beverages, candy, coffee, tips, etc. There are numerous websites and even applications for smartphones that can make this task easier.
Comparing Plan vs. Actual
At the end of every month you have to measure your performance. Did you hit your plan? A budget does no good if you don’t know how you are doing. You must determine if you hit your spending goals or didn’t hit your spending goal. If you didn’t, you must know why not and make changes accordingly. You may realize that you underestimated how much money you spend on lunch and decide to start taking your lunch to work. At the end of every month, you must sit down to compare your plan vs. actual spending. You must act as if you are a company and operate your finances as if you are a business. You must take it seriously and continuously measure your performance. You must look at it as a challenge that you must win.
A great free online tool to track your expenses is at Mint.com
. Mint.com helps you to create a budget, pay off debt, pay student loans, save for retirement and a lot more. And best of all, it's free.
Below is a short video with some tips on how to make a budget and track your expenses.