Where is My Money Going?

Yesterday, you answered the question of why you need a budget--setting your budgeting goal. With budgets, you have to know where you've been to get where you're going. Today, we're going to figure out where all of your money is going. You may be surprised what you discover!

There are a couple of different ways you can go with this step. I'll get you started, but figure out the best way for you.

The notebook method
Keep a small notebook with you at all times. Record every purchase you make or every bill you pay, no matter how small. Keep your transactions in your notebook for at least one month. At the end of the month, tally your costs and take a good look at what you're pending your money on.

Receipts, meet envelope
You can also gather your receipts from each purchase and place them in an envelope over the month. At the end of the month, you can sort the receipts by purchase type and do the math to see where you're spending your funds.

Automate it
Some credit card companies do it for you, but there are also programs you can use to download your credit card and bank statements. The program then categorizes your spending for you. Geezeo and Mint are two online programs that allow you to track your spending for free!

At the end of this exercise you'll have a much better handle on what you're spending your money on. Then, you can figure out how to make the necessary changes to reach your goal.