Conscious Spending: Observe Where Your Money is Going

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The first step on the road to Financial Independence is observing where your money is going. Not judging, just observing. The easiest ways to find this out are by tracking your spending for a couple of months. Here are three easy ways to track where your money is going:

1. Collect a receipt every time you buy something. Empty your purse or pocket daily and put it on a spike on your desk or hall table. At the end of each calendar month, take a piece of paper, or use an Excel spreadsheet (we have samples you can download off our website), and note categories of where you spent your money.

The categories to keep track of your spending could include:

• Car: gas, carwash, oil change, windshield fluid, maintenance, etc.
  
• Groceries: food, spices, condiments, etc.
  
• Toiletries: toothpaste, shower gel, makeup, etc.
  
• Entertainment: dining out, coffee at Tim Horton's or Starbucks, video rentals (and late fees), concerts, computer games, etc.
• Gifts: birthday and Christmas presents, etc.
• Clothing: shoes, boots, coats, etc.
• Health: gym membership, yogas classes, sports equipment, etc.

You'll also likely have bills for a cell phone, landline, cable, hydro, and gas - you should also put those on your spike too, once you've paid them. Create a 'Utilities' category for this sort of expense.

Tally up the totals. Don't judge where or how you spend your money, just record it. Tip: *Be honest about whether an item belongs in 'Entertainment'. For example, "taking kids to McDonalds" is 'Entertainment', not considered 'Groceries' and a "pedicure" is 'Entertainment', not considered 'Toiletries'.

At the end of the month, your bank statement will have other withdrawals on it, such as your rent or mortgage payment, insurance, property tax, strata fees, car loan payment, etc. Be sure that all is categorized and accounted for on your paper or spreadsheet.


2. If you have a tendency to forget to ask for receipts or lose them (my husband is notorious for this), put EVERYTHING on either a credit or debit card. Using this method, you have a printed record each month as to what you spent and where. From your monthly bank statement, you can go ahead and record your categories and see where you are spending and how much. **If you are using a debit card, make sure to have a banking plan that is unlimited or that charges you no fees for withdrawals (Coast Capital Savings may be a good bet).

3. If you use credit cards for everything, make sure you are already very disciplined about not overspending, because without fail, you MUST pay off the balance in full before the due date. You can set up your online banking to automatically pay the amount in full by the due date each month so that you don't forget! Also make sure you are using a card with no annual fees. Credit card companies will usually give you the option of having no annual fee, but in exchange you will have a higher interest rate - take this option because you are not going to pay them a penny of interest anyway by paying off the principle in full each month.

Choose a credit card that gives you a 'Cash Back' option, or one that has Airmiles, or some other freebie. We use the VISA Platinum Avion, and by putting everything on there, we are able to take a free vacation each year. This card does have an annual fee of $120.00, but that is much less than the cost of two or three plane tickets, (and we record the $120.00 cost in "Entertainment").

You might think this is easy. Awesome - go for it! Others of you may think this is as much fun as having your skin pulled off. Trust me, I understand. One of the ways I was able to take this action step was to hire a coach (soliciting a solid, organized friend could have worked too, but I didn't have any friends like that at the time!) to walk me through the steps and keep me accountable to do it daily.

I committed to setting up a new habit - putting the spike where I could see it on my desk, and emptying out my purse each week when it was starting to overflow. It only took a few seconds to write on the back of the receipts what the expense was (car, groceries, etc.) and put the receipts on the spike each time. I booked two hours in my calendar on the first of the month, so I had time devoted to writing down the categories, recording my spending and writing up the totals from the month prior. After the second month, it became faster and easier. I was then ready to take a look at my spending habits - and wow!! I was able to see clearly what kinds of choices I had unconsciously been making - some were right on track with my values, and some not - and it became the beginning of a richer, more conscious lifestyle - more on this topic next month! For now, just start tracking!!

For a sample spreadsheet that you are welcome to use, please visit the resources section of our website.