Successful Budgeting – Follow the Money

In our Budget Basic Series, we introduced the fundamentals of successful budgeting:

1. Know your starting financial position


2. Identify your financial Goals


3. Set up a customized budget that will get you from where you are to where you want to be


4. Stick to your budget with monthly reviews and updates

While most people want to follow a budget, they find it difficult to set up a realistic budget that they will stick to.

Frequently, this is because many people do not know where their money goes. They do not keep close track of their spending. They take $100 out of an ATM and the next day are surprised to discover they only have $15 left – and don’t know where the $85 was spent.

Note: loosing track of debit and credit card spending is equally of concern. It is all your money!

If you find that you have these problems, you are not alone. However, just a few weeks of tracking your spending will help you to better understand where your money is going.

To make this as easy as possible, simply use a small notebook – or make your own notebook using lined paper. Don’t use loose sheets of paper – they get lost. If you are too rushed to write the amounts down as you make your purchases – put your receipts in the notebook and record them later on the same day. Get into the habit of asking for receipts everywhere you spend money!

Your tracking does not have to be fancy; it can be as simple as:

At the end of every week – total up all money you have spent. At the end of a month – do a monthly total. Expect to be surprised.

If you follow the money with a simple tracking system like this, within a few weeks you will have a much better understanding of where your money is going. In addition, you will most likely be more motivated to improve your money management.

Set up (and follow) a realistic budget – with your newfound awareness, it will be much easier to do!