Friday, October 2, 2015

Income and Expenses

The next step in becoming financially independent is to track your income and expenses for 1-3 months. By doing so it will give you an idea of where your money is going.

We did it when we were 19 years old and have done it whenever we feel that expenses are getting away from us.

I keep a small notepad in my purse so that I can write down every penny that I spend while I am running errands. If my husband is out doing errands, he lets me know what he spent when he gets home. Whether that is $ 90. on groceries, $ 26. on gasoline, or a haircut for $ 25., it all gets written down. Most of our expenses get tracked by using our best rewards credit cards. Some get automatically deducted from our checking account. We pay our credit cards in full monthly. But if you aren't good with paying your credit card in full every month, then I suggest that you use cash and write every expense down.

Every month I track every penny we spend along with the income we receive. It all gets entered and  tracked online. There are two free online sites that are excellent for doing this: Mint and Personal Capital. Research both sites and determine which is best for your needs. Or if you want to do it with just  a notebook and pencil, that is fine too.

I hear you saying, "That's too much of a bother. I am not going to do  that." But if you are serious about getting out of debt, saving for a  specific goal or  for financial independence, please do it.  It will be the best time you have spent for your financial well being.

Look at your totals at the end of the month. Finally see where your money is going. This puts a name on every dollar you spend. Over the years I have been surprised at how much we did or didn't spend dining out, how much groceries cost that month, what clothing costs were, how much we spent on gifts, etc.

I will be doing this every month as I  write this blog to share with you at the end of the month. Since it is only October 2nd and I am sure you can remember  what you spent yesterday, this is a good month to  keep track.

We will discuss my totals and what I will do about them at the end  of the month.

Meanwhile, if you have any questions, feel free to ask them by leaving a comment.      

 

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