How to Track Your Daily Expenses

Unless you're really lucky, money is a limited resource. Down to the last penny, you probably know where it comes from and why you deserve it. Spending is another issue, though. Even if you have a budget, dollars slip through the cracks, and that adds up. But with a little awareness and organization, you can track where that money goes.

Difficulty: Moderately Easy

Instructions

Things You'll Need:

• Ledger
• Note pad and pencil
• Clothing with pockets

1. Set up a ledger. It can be as simple as a few pages from a columnar pad, or as fancy as an accounting software spreadsheet. Designate columns by general categories, such as food, transportation, amusement and anything else that might describe where your money goes.

2. Designate a money pocket. Know exactly how much you have in this pocket when you leave the house and write down that amount. Get into the habit of returning all change, whether bills or coins, to the same pocket.

3. Keep track of where your daily travels take you, whether you're running errands or just wandering around. Start out with a list or make one as you go.

4. Keep track of what you buy. Begin with a shopping list, if possible. Ask for receipts whenever you can, and keep them all in the same pocket. If you can't get a receipt, jot the amount spent on your note pad.

5. By the end of your outing, you'll be carrying a lot of information in your pockets and in your head. Sort it out as soon as you get back home. Subtract what's left in your money pocket from what you had earlier. Between your receipts, itinerary, shopping list, notes, memory and remaining cash, you should be able to account for every penny you spent.

6. Enter each expense in your ledger. It's okay to combine items as long as you end up with the same totals. For instance, if you spent $3.00 in a parking garage, $0.50 at a street meter and $4.00 for bridge toll, you can just call it $7.50 for transportation.

7. Do periodic look-backs at your day-to-day spending. Monthly totals probably make sense, since most people plan or revisit their budgets early in the month.

Tips & Warnings

• General ledger categories are easier to work with than highly specific ones.
• If you'd rather keep your money in a purse or wallet instead of rattling around your pocket, the money pocket principle still applies: know your starting amount, and return all change to the same place.
• The real trick to tracking daily expenses is that you're actually training yourself to be more observant, and getting into the habit of remembering details. Both are extremely useful skills to cultivate.