Do you know where your money is going?
I blog a lot about decluttering and organizing — but one of my favorite things to talk about is money and how to manage it.
That’s why I’m writing today to encourage, no urge, you to take this one step (if you don’t already).
Everyone (and I mean everyone) should be tracking where their money goes. No exceptions, no excuses!
Unless you have more money than you need or want, tracking how and where you spend your money is essential.
What is the key reason to track your spending?
Knowledge is power, people!
Be brave. If you’re interested in making your money stretch farther (and who isn’t?), you’ve first got to know what you’re doing with it before you can make any real improvements.
How can you plug those money leaks if you don’t know where your money is going every month?
Maybe you’ll be pleasantly surprised by your frugality at the grocery store, but you discover that you’re wasting an average of $150 a month shopping on Amazon for new gadgets and toys that end up being a huge source of clutter in your home.
If you can cut out the overshopping in this one area, you not only save money but also make your decluttering projects easier!
>> Need help with overshopping? Check out our Stop Overshopping masterclass!
When deciding how to track your expenses, you have several options:
- low-tech – jot down purchases in a small notebook in your pocket
- software such as Quicken or You Need a Budget (affectionately known as YNAB).
- budgeting websites like Mint.com
- charge everything to one credit card
- cash envelope system This won’t really tell you specifically where you’re spending your money, but it will easily tell you how much goes to each category.
One more option: keep your receipts and tally them up at the end of the month. I have two words for this option: bad idea! Please do not think you can hang on to receipts and random notes to yourself and use this to keep track of your expenses!
Call me a budgeting bully, but if you try to do this, I promise you, you will do one of the following:
- You’ll forget to do it at all.
- When you sit down to do it, there are so many receipts, tallying them is way too much of a chore.
- You’ll probably lose a good portion of your receipts.
- If you manage to get through one month, you’ll lose momentum shortly thereafter if it’s not a more frequent habit.
Entering purchases daily or every few days using whatever system you choose is much easier to maintain than waiting until month-end.
My YNAB Review
My money management choice for the past decade has been an application called You Need a Budget (YNAB).
How do I use YNAB to track spending?
Most bills are on auto-pay – I have reminders in YNAB for these and approve them a couple of times a week when I balance the accounts. I do this at least once a week.
I use the YNAB smartphone app (see below) when on the go to record any purchases right away.
I love that I can take a few seconds to enter a purchase rather than having a pile of entries to make later on in the week. In YNAB it’s just a few clicks. It syncs up seamlessly with my home computer and with anyone else on my account.
I can use the YNAB app to double-check how much I’ve already spent in a budget category – this is great if you’re trying to stay under a certain amount.
I use YNAB’s reconcile feature to make sure my accounts balance and that I haven’t missed any entries. I log on to my bank’s website and match up the transactions with my YNAB records.
Since I’m entering most purchases immediately, it only takes a few minutes to reconcile my accounts each week. A few clicks to match up the transactions and I’m done.
YNAB has a host of other fun features.
Reporting is dreamy, especially to a numbers nerd like me, and the whole interface makes you feel that you have all your financial data at your fingertips.
YNAB actually goes way beyond tracking your purchases – it’s main goal is to help you budget. I use it to keep track of money set aside for future purchases in sinking funds (more on that in a future post). They even have free classes on budgeting! That’s my kind of company.
I realize it’s not much fun to pull out your phone and enter a transaction every time you buy something. Maybe your friends will give you a hard time for being so stingy (not that budgeting makes you stingy, but to those who don’t do it, it’s a strange practice).
But I promise you that if you’re looking to increase your savings, cut back on excess spending (that leads to excess clutter), or get out of debt, tracking your purchases is the absolute first step you must take.
Perhaps I do sound like a budgeting bully.
But this is advice that has served me well and I hope you find it useful, too. Can we still be friends? 🙂
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18 thoughts on “The Key Reason to Track Your Money & How to Do It Easily (YNAB Review)”
I love YNAB!
We started using it last year but then it all got away from us.
I’m hoping to start again in February. And now that I have a smart phone (since November!) I can use their app- totally forgot about that!
Yay! You’ll love the smart phone app! Thanks for commenting.
Funny.. I just now put the finishing touches on a blog post I wrote about tracking spending. I love it, it really helps me make better choices.
I always come back to pen and paper after trying the electronic tools – interestingly, Simple Bank (I’m a customer) tracks spending by placing your debit card purchases in various categories. Really cool – for those of us who don’t use credit cards.
We are definitely on the same wave-length! What a great service your bank offers – that would make it really convenient.
Thanks for stopping by!
We have (and in theory use) Money Matters Software. It’s about 5 years old. Maybe more. A basic tracking/budgeting software. BUT, my husband is in charge of it and only enters every 6 months or so. DRIVES me bonkers! As a result I never know exactly how much money we have left in our different “envelopes” so I’m trying to get us on a cash system and track each month with how much cash I have left in each category. We don’t have a credit card so all our spending is cash or debit. We are in really good shape financially but we’re trying to save for a bigger house. The best way to do that is through accurate budgeting and tracking. Thanks for sharing one of your favorite tools.
Oh yes, if you start tracking, you may find some hidden savings you hadn’t noticed. It’s hard to add another habit when you’re already so busy – I hope one of you finds the time 🙂 Thanks for sharing.
Such an important post! Thank you for working so hard on it for our benefit! Blessings to you!
Thank you, Diane!
I just heard about this program last week and am seriously considering it. We just upgraded to smartphones this fall and I would love an easier way to track our spending. Although, I am contemplating Quicken as Costco has it on sale and I can get the business version to track my business income and expenses.
Maybe you should take them up on the 34 day trial. They also run a lot of classes (free also) to help you get the most out of it. I used to use Quicken but I got tired of having to upgrade in order to reconcile my account.
Thanks for your comment!
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How does this compare with mint, in your opinion?
Honestly, I haven’t looked at Mint in a long time – I remember the hooks into your accounts was super handy, but I was a little wary of having all my data available online in one place, especially on a free site. Unfortunately I’m not able to give much of a comparison. Do you use Mint?
I have used both Mint and YNAB. I LOVE YNAB. Mint is fine for long range goal planning, but the main problem is that it doesn’t require you to do anything once you set it up, which means (for me at least), that you don’t. I love that YNAB requires me to pay attention. There’s a lot more work involved in YNAB, but without that work, I’d just be spending money because it is available in my account. YNAB makes you verify that you haven’t already earmarked that money for something else (like a quarterly bill, vacation savings, taxes, etc.)
Hi – thanks for your comment. Actually I’m going to be posting about blogging late next week so make sure you’re subscribed to the newsletter or come back next Friday for all the details. 🙂
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