Tracking your spending isn’t glamorous or fun, but it is necessary if you want to become financially successful. Let me tell you a story I am ashamed of.
In 2013 I was deep in debt and drowning in credit card and student loan payments. I had done something in my 20s that was starting to catch up with me. I signed up for a student loan repayment plan that was called a graduated payment.
This meant that I was only paying interest payments and then it would balloon up after 10 years. Well, the piper was piping and he wanted to be paid. I was making over 90k a year and I had to call the government (because my loan was owned directly by the feds). I had to get on a payment plan because my monthly payment was ballooning from $400 a month to over $800 a month and then a month later I was told it would be more than my mortgage.
I was stunned. Shocked. Angry. Luckily I owned a home and could refinance at the same interest to get out of this legal balloon payment I could never get rid of. But without that asset, I would be paying over $2000 a month in student loan payments for many years to pay off my $43k+ student loan.
Hopefully, you aren’t in that situation. But having my student loans double overnight forced me onto a budget. No more eating out, no more fun spending. I couldn’t afford it. So let’s talk about why you need a budget and why tracking your spending is the best thing for you to do for your family.
These ideas are based on my personal experience and opinion and should not be considered professional financial investment advice. Furthermore, the ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.
Why You Need a Budget
If you’re like most people, you probably feel like you could be doing a better job tracking your spending. You’re not alone—mismanaging money is one of the top financial stressors in America today. But what you measure is what matters. If you don’t measure where your money goes it is easy to wake up and wonder where it all went.
A friend of mine wasn’t charged rent for one month. In reality, he didn’t get the reminder from the building manager and he spaced it out. Then a month later the manager comes by and says, “Hey you didn’t pay us last month so this month I will need both last and this month’s rent.”
My friend started to freak out because the money was gone. He was telling me that he didn’t know where he spent $1300. Like it just disappeared. He remembers buying more movies and games and eating out but surely not $1300’s worth! But that is exactly what he did. Situations like this are why you need to be tracking your spending on a regular basis.
Frankly, we all do it if we don’t have a plan for where our money is going and then we get shocked by surprise bills that may not have been a surprise.
A budget is simply a plan for your money. When you track your spending and make sure your income covers your expenses, you’re able to see where your money is going and make changes as needed. This gives you power over your finances instead of feeling like they’re controlling you.
The other reason to have a budget is for investing. You need to build assets with the money you have coming in. An asset is anything you own that brings you more money.
Making a budget can seem daunting, but it doesn’t have to be complicated. And the benefits are worth it—with a budget, you can finally take control of your money and start achieving your financial goals.
What is a budget?
Budgeting might seem like a daunting task, but it’s really not as complicated as it seems. A budget is simply a plan for how you’ll spend your money. You can use a budget to track your spending, set financial goals, and make sure you’re not spending more than you earn.
Creating a budget is the first step to getting your finances in order. It can help you get out of debt, save money, and make better financial decisions. If you’re not sure where to start, there are plenty of resources available to help you create a budget that works for you.
Debt Payoff and Budget
If you are stuck in thousands of dollars of debt like I used to be (80k in student loans, more than 10k in credit cards and two car payments, etc.). This can help you.
Learn how to pay off debt – set your money goals and get a plan to get your net worth positive.
We track your income, debt, savings, and investments so that you can reduce debt and grow the other three.
There’s no one-size-fits-all approach to budgeting, but the most important thing is, to be honest with yourself about your spending habits. Once you have a handle on your finances, you’ll be able to make informed decisions about where to allocate your money.
Why is it important to have a budget?
A budget is an important tool for tracking your spending and keeping your finances in order. By creating a budget, you can see where your money is going and make adjustments to ensure that you are spending within your means.
A budget can also help you to save money by identifying areas where you can cut back on spending. For example, if you find that you are eating out frequently and spending more than you had planned, you can adjust your budget to allow for less eating out and more home cooking.
Creating and sticking to a budget takes discipline, but it is worth it in the long run. Having a budget will help you to stay on track with your finances and avoid overspending.
You should have a $1,000 emergency budget setup to prevent surprise expenses from causing you to go into debt. So cut down expenses to build that fast.
Need to Save More Money?
Would you like to know how to save $3000 in 3 months or 6 months?
Maybe you are just looking to develop good habits to have an emergency fund to stop living on credit card debt.
Check out my article for many easy-to-use tips, regardless of your income, to save money in the long haul that doesn’t look like “Just use door dash.”
Click here to learn how to save $3000 in 3 months.
How can you make a budget?
Making and sticking to a budget can be difficult, but it’s important to track your spending in order to save and invest more of your money. There are a few things you can do to make budgeting easier.
First, figure out what your regular expenses are. This includes fixed costs like rent or a mortgage, as well as variable costs like groceries or gas. Track these expenses over time to get an accurate picture of where your money goes each month.
In order for you to be successful financially you need to pay yourself first! This means that you must put money into savings each month and then live on the rest. If you have a quick budget you can pretty quickly see that spending $800 on lunches every month may be better spent by saving $500 a month and only eating out a handful of lunches each week.
If you are like me and put on permanent work from home then should be even easier to save money that you used to blow on food daily for convenience. You may also lose weight like I did, which is a great side effect. More money in your pocket and healthier – yes sir, sign me up!
So in addition to saving $1,000 for emergencies, you need to simultaneously start saving at least 3 months of your income and get your company’s matching 401k, because that is free money.
Instead, take the discipline to just capture what you have been spending.
DON’T MAKE ANY CHANGES (yet). You want to monitor this over the period of the last several months as this will help with tracking your spending.
Look at what you spent last month and the month before.
Where Is Your Money?
Most people don’t know what they are invested in when they start a new job and open up a 401k.
Do you know exactly what the fund or funds you are investing in even are?
How much are you spending on fees?
What if there was a way to invest in the biggest companies in the world easily and with fees less than 0.1%?
Is there any expenses that can be easily removed? If so, make a plan to do that and the next time you are paid transfer that money to savings.
Continue to do this until you have an emergency fund. Then log into your company’s retirement plan and at the very least get the free company match.
If you want to learn more about what to invest in go to my article on How to Invest on Autopilot.
Are you living your best life or are you stressed about paying the bills?
In this quick 2-page PDF, I cover 5 ways you can get your financial life back on track.
I used to live paycheck to paycheck and after years of paying off debt and maximizing my investments I am now able to save and invest more than 45% of my wife and I’s gross pay.
This allows me to live comfortably (not a crazy rich person) and sleep better at night. If you want this let me know where I can send it to you below.
Wow, you read a lot to get here. Can you do me a favor, please? Can you leave a comment if this was helpful to you or if I missed something? Alternatively, it would help me out a lot if you shared this content with those that might need to see it. Thanks, you are the best!
The Importance of Tracking Your Spending
In conclusion, tracking your spending is important because it allows you to see where your money is going and make changes if necessary. It can also help you save money and reach your financial goals. Tracking your spending takes some time and effort, but it is worth it in the end.
Remember that what you don’t measure doesn’t change. If you need more help get my budget and goals PDF here.
I want to leave you with something that helped me out in life for anything hard.
This statement helped me climb out of net worth in the negative $105,000 to a positive $600,000 and growing.
This statement helped me lose over a hundred pounds in less than a year and a half and keep it off.
This statement strengthened my marriage and helped me get promoted numerous times at work.
GO AND CHOOSE YOUR HARD!!!! Pick wisely, but I believe in you.
About Dwight Scull
I have been married to my wonderful wife, Rebecca, who puts up with me since 1999. I am a proud father to my Gen Z, son, and daughter-in-law. Grandfather to my favorite granddaughter who was born in 2021.
I lost my mom, father-in-law, and 12 others in 2013 and was DEEPLY in debt. I started reading and watching all the financial info I could find.
I chipped away at my debt and went from a negative $105k net worth having one home paid off, no credit card debt, and saving/investing 45%+ of my gross salary.
I used these daily habits to lose 100 pounds and keep it off.
I believe that you can overcome any challenge you face if you just take small daily actions and be consistent with them. It is how you will be financially successful.
Join my free Facebook group to get a ton of free resources to help you get out of debt, learn how to invest your money and work toward having the option of retiring early.