Step 1

So, you’ve decided on some financial goals.  Congrats!  Now, you’re wondering how you can start saving money to meet those goals.  Well, the first step is to look at where your money is going.  I did this over 20 years ago, and it was eye-opening even though I’ve always been frugal.  A friend was shocked by what she learned when she did this, and the changes she made improved her financial life tremendously.

Keep a detailed record of EVERY penny you spend for at least 3 months.  Be specific.  Having categories like “groceries” and “entertainment” won’t help much.  Dig deeper: chips, milk, alcohol, soda, vegetables, movies, pubs, etc.  Some broad categories might include restaurants, fast food (separate from restaurant category), rent/mortgage, insurance, electricity, water (utility), gym, hair salon, nail salon, telephone, fuel, birthday gifts, holiday gifts, etc.

If you buy something specific almost every day such as a soda, tea, coffee, lunch, etc., it needs its own category such as morning coffee, afternoon tea, work lunch, etc.  I don’t care if it’s “only” one dollar.  You’re tracking EVERY PENNY.

Do you have a weekly guilty pleasure?  It needs its own category too.

At the end of the 3 months, look at the totals.  Is there something that stands out?  Are you shocked?  A friend couldn’t believe how much she spent on pleasure books by spending “only” $4 per week on a new book.  She finally got a library card when she looked at her numbers.

Looking at your numbers, is there a category that you can eliminate completely?  I imagine there is.  Is there a category that you know can be reduced immediately?  I imagine there’s at least one of those.  I recently reduced my alcohol category because beer hasn’t been the right sale price.

My future posts will give you ideas on how to reduce spending on most categories.  I’m also going to track EVERY penny I spend for the entire year of 2019, and I will let you know the details (haven’t decided how often I’ll disclose them).  I can give you an estimate for 2018, but I would rather start with real numbers.  After all, I don’t think I could break out alcohol from my credit card statements in 2018, and I’m pretty sure that’s my biggest grocery expense.  I would also need to estimate the cash I spent.  I used to keep all of my credit card receipts for a year, but I now only keep and scan certain ones as I’ve started my journey into minimalism.  If I had them all for 2018, I would only need to estimate cash.

I already have a list of topics that I will be covering, and my list keeps growing.  Is there a particular topic you want to see?  You can leave a comment below or send me a message on Facebook or Twitter.  Do you have a preference on how often I disclose my spending (weekly, monthly, semi-annual, annual)?  Let me know.  I know that I’ll Tweet periodic spending, and I’ve already Tweeted a couple of those.

This first step is important.  I want YOU to have financial success!!  Good luck keeping track for the next 3 months (minimum), and it might even turn into a fun game!

Update:  I provide my detailed spending on a monthly basis, and my annual report includes a summary with broad categories.

Linda 🙂

my 2019 spending / my 2020 spending / my 2021 spending / my 2022 spending / my 2023 spending / 5-Year Comparison