The Best Way To Keep Track Of Your Expenses
The Rising Costs of the American Dream
For some of us, viewing a monthly bank statement can result in a minor panic attack. Money, it seems, can fly out of checking accounts just as quickly as it comes in. Rent, grocery costs, loan payments, electricity bills – which make up our “mandatory” expenses – are in a continuous upward spiral. According to a recent USA Today study, the average price of living the American dream is now a whopping $130,000.
The problem of rising expenses is compounded by a common problem in financial management: disorder. Disorder is a natural result of having so many different bank accounts, credits cards and ways of paying for things. On average, we have 9.5 credit cards. We also have debit cards, we set up “auto-pay” for some of our bills, we pay with direct deposit and, sometimes, we still use cash.
Without knowing how much you spent on restaurants, or on gas, it can become all the more difficult to accurately determine where spending cuts should be made. In such cases, a little financial housecleaning could be in order.
The Solution: Bringing Order to Your Financial Life
So what’s the best way to manage your expenses?
The first step is simply to keep track of your expenses. And if you can, find out what your historical expenses have been. Once you’ve tracked down your expenses, sort them into different categories: housing, travel, groceries, dining out, etc.
Pausing to analyze your expenses helps you to see how well your spending maps onto your priorities. From there, you can begin to identify savings opportunities. For instance, seeing that you spent $2,000 on clothing/shoes last month might be fine if you have the money to do it, or if were shopping for a wardrobe for your new job. But it might be more than you meant to spend!
Personal Capital has apps that enable you to view all of your money in one place. Using the expense category tool, it’s easy to classify each transaction appropriately and obtain an overall picture of where your money is going. Whether you’re looking to cut your spending on clothes or increase money spent on something more important, this tool gives you the insight you need to manage your cash flow.
The following article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.
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