How much did you spend on groceries last month? On gas? If you are like most consumers, you might not be able to answer—only one in three Americans track their spending.
This is a missed opportunity. Knowing how to track your spending brings financial awareness, which is essential if you want to grow your assets. Your daily expenses might not feel like a lot, but keeping track of them can shine a spotlight on bad habits, such as eating out every day or heading to the mall on a whim. Understanding where you can cut expenses can help you save money and build wealth.
Tracking your spending is the simple task of documenting every purchase you make in a day, from a coffee to the electric bill. Today’s tools afford us options for tracking: good old-fashioned pen and paper, mobile apps, or smart worksheets such as Tiller that allow users to create a custom daily spending spreadsheet.
Different methods will work for different people; the only thing that matters is that you commit to tracking every expense for a window of time, such as one to three months. You will see which purchases are essential (such as rent, insurance, utilities) and which can be cut (such as premium cable, drive-through coffee, and take-out). With that knowledge, you can begin to change your habits.
Finding your method for expense tracking is only the first step; however, you have to stay smart about tracking your spending if you want to grow your finances. These tips can help:
Before you shop, do research on what you are buying. The majority of consumers might not be tracking their spending, but they are doing research. The Ecommerce Foundation’s “United States Ecommerce Country Report” found that 88 percent of consumers in 2017 researched purchases before buying. The extra effort is worth it—you will know you are getting the best price for a purchase.
A budget keeps your daily spending spreadsheet in check by setting limits. If you are not sure what type of budget to create, do a self-assessment to point you in the right direction. The type does not matter as long as you create one that works for your lifestyle. And once you have created it, stick to it. Many create a budget only to fall victim to impulse buys—you get carried away, and suddenly there goes a chunk of money that was meant for necessities. It might feel challenging but staying true to your budget gives you more control over your spending.
Everyone needs two “best friends” in the finance world: an accountant and a financial planner. An accountant specializes in advising on financial matters and helping you file taxes, while a financial planner will be your go-to resource for understanding how to manage your spending and grow your finances. Both are important aspects of tracking your spending and managing your wealth, so when you are ready, find the best friends who suit you.
The best time to start learning about personal finance is yesterday. Half of American households live paycheck to paycheck, and if that describes you, know that you deserve better. Start small by tracking your spending, creating a budget, and seeking help from financial professionals. And if you are still feeling stuck, Cathay Wealth Management is here to help.
Check the background of this investment professional on FINRA’s Broker Check
Registered office: 825 E. Valley Blvd., 2nd Floor, San Gabriel, CA 91776 Tel: 1-877-722-8429
Securities and insurance products are offered through Cetera Investment Services LLC (doing insurance business in CA as CFG STC Insurance Agency LLC), member FINRA/ SIPC. Advisory services are offered through Cetera Investment Advisers LLC. Neither firm is affiliated with the financial institution where investment services are offered. Investments are: • Not FDIC/NCUSIF insured • May lose value • Not financial institution guaranteed • Not a deposit • Not insured by any federal government agency.
Individuals affiliated with Cetera firms are either Registered Representatives who offer only brokerage services and receive transaction-based compensation (commissions), Investment Adviser Representatives who offer only investment advisory services and receive fees based on assets, or both Registered Representatives and Investment Adviser Representatives, who can offer both types of services.
This site is published for residents of the United States only. Registered Representatives of Cetera Investment Services LLC may only conduct business with residents of the states and/or jurisdictions in which they are properly registered. Not all of the products and services referenced on this site may be available in every state and through every advisor listed. For additional information please contact the advisor(s) listed on the site, visit the Cetera Investment Services LLC site at www.ceterainvestmentservices.com.