Where does the money go?

Whenever I completely ignore the scale and eat whatever I want, I gain weight.Always.But when I check the scale every few days or so and keep track of my food selections and portions, I maintain or lose weight.Always.That’s just how it works for me (I know things could change as I get older).

Today, however, I’m not going to be talking about tracking food.I’m going to talk about tracking money because the same principles apply.When you keep track of your spending, it is a thousand times easier to be deliberate about where your money goes.

Whether you’re barely lasting from paycheck to paycheck or sitting pretty in the house of your dreams with zero debt to your name, I’m guessing that your money matters to you.You take your stewardship over your finances seriously.You want to be wise about how you use your resources.You want to care for your families in every way possible and help others who are less fortunate.You want to be trusted by your spouse.You want to be smart.

If you want to be better about tracking your spending, but you feel like your sometimes-chaotic family life doesn’t leave enough space in your brain, here are six ideas that will help:

1. Pick a spot where you will record what you spend.

Honestly, this one decision is what stops the majority of us from even trying.We know we’ve got to track each purchase in order for this to work (because we’ve seen how the calories in our doughnut count even if we forget to write them down), but we’ve got to find a tracking system that will work with our habits and lifestyle.

Maybe you’ve got a phone app for money management, but you keep forgetting to use it because your children are talking to you whenever you leave the store.Maybe you have a computer program all ready to go, but it’s a bother to enter all your data once your children are tucked in bed and you can barely keep your eyes open.Take a minute to seriously consider this question:Where would you most likely record your spending?

Sarah, from Memories on Clover Lane, uses a simple sheet of paper taped to the bottom of a drawer in her kitchen.

When she gets home from the store, she transfers her receipt totals onto this sheet of paper — leaving off the cents and just rounding up to keep it simple.

I carry a paper planner with me, so I assign one page each month to financial tracking, and while I’m standing at the check-out, gas pump, restaurant, etc., I quickly jot down how much I spent.

2. Narrow your focus.

You want a system that you can actually maintain, and the simpler the better.I found that a budget with 50 line items — from haircuts to electric bills to student loan payments —left me feeling dizzy and frustrated. Now I divide my page (pictured above) into Groceries, Gas, Home and Extras (like clothes, gifts, and school donations), Dates and Fun, and Seasonal Extras (like birthday gifts, family portraits, and holiday expenses), and I note my spending cap/goal right next to the category title.My husband hands me his receipts at the end of each day so I can record his purchases as well.

These are the areas of spending I can directly control, and seeing a simple list like this feels very doable.In Sarah’s example (also above), she describes her categories like this:

FOOD – I shop at a super-store type of place, so this also includes small household items and cleaning supplies.
ATM ($) – our cash withdraws.
EXTRA – clothes, books, gifts, school supplies, everything that’s not food pretty much.
OUT – all eating out, movies, entertainment, tickets to events that sort of thing.

Simple Mom uses Pear Budget, combined with an envelope system I’ve heard works wonders. You can click here to see her whole process.

However you decide to do it, by starting out with a narrowed focus, you’ll most certainly get into some great habits.

3. File necessary receipts

If I can’t immediately transfer my receipts, I keep them at the back of my planner until I do.I toss the receipts that I won’t need —things that I won’t be returning and that are recorded on my bank statement —and anything that might need to be returned or needs to be saved for tax purposes is kept in my Finance Cubby (I clean this out once a month).

If there are receipts that I need to keep with me for one reason or another, I have a nice little envelope from FranklinCovey that fits right into my planner.This has saved my life on more than one occasion.

Last month, I bought a camera to replace the one that fell in the toilet (long story).I didn’t know if I’d like it or not, so I stuck the receipt into this envelope.After taking too many blurry pictures, I wanted to return it, so I pulled out the receipt I’d filed, and added “Return Camera” to my Errands list.So simple.

4. Make time for a monthly review.

This is the trickiest one for me, but it’s something I’m committed to doing each and every month.By adding up my spending, checking for errors, and having a quick financial discussion with my husband, we can make sure we’re on the same page.Too many marriages struggle because of finances, and this once a month discussion is something that deserves high priority.

Sarah keeps a separate notebook for recording her spending in each category once she’s reconciled for the month.

And then she keeps a yearly sheet that shows her totals for each month:

Great ideas, don’t you think?

5. Don’t get frustrated if you can’t do it perfectly.

Just like with dieting, if you “fall off the wagon” or keep forgetting to record your spending, you might want to give up. Please don’t.Involve your children in the process.Ask them to help you transfer your receipts over.Involve them in some of your money decisions.There are far too many families who are financially stressed right now, and as deliberate mothers, we can make this situation better.

6. Identify and reshape how you look at money and possessions.

Maybe you don’t have a problem with this, but from what I see around me, I think there are a few principles that need to be ingrained into every family.

  • It’s not the “stuff” that makes you who you are.
  • It’s not the “stuff” that makes your home attractive to your children’s friends.
  • Money problems do bring stress, but there are almost always other issues that are much, much deeper.
  • You can never have enough of what you don’t need.
  • Careful spending and careful tracking doesn’t make you a “penny pincher.”It means you recognize that you are accountable for what you spend.
  • Raising money-conscious children is a benefit to society and to our own families.

Something powerful happens when you track where your money goes. I can’t even tell you how many times I’ve opened my planner to record a purchase, and the checker has said, “Oh, wow. What a smart idea to record what you spend. I should start doing that.”And then we get into these long conversations about how stressful it is when you spend money without really thinking about it.We talk about overdraft fees and about how quickly a bunch of small receipts can add up to hundreds of dollars. This process doesn’t have to be so complicated.

If you have more ideas to contribute, please do so in the comments below.Let’s work together to create a culture where smart spending and careful tracking is the only way to go.

QUESTION: How do you track your spending?

CHALLENGE: If you don’t have a system that works with your lifestyle, start one today!

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