Be mindful of how you’re spending your money.

I don’t care what you spend your money on.  Maybe your passion is rebuilding old cars and you spend lots of money on parts.  Maybe you love microbrews, and you travel around doing tastings at different breweries.  Maybe you just really love expensive shoes.  I’m not going to tell you that it’s bad to spend money on any of those things.  I just want you to pay attention to where your money is going and I want the decisions you make around spending your money to be active decisions.  The worst thing you can do is just passively let your money disappear without having any idea whether it’s going to the “right” place – wherever you think that is.

And that brings us to…

If you want to be sure where your money is going, you have to track it for a while – maybe a few months.  Trust me, I know how painful this sounds.  Tracking anything in your life – exercise, food, money – is not an easy thing to start.

It may be a challenge to begin, but once you find a method that works for you you’ll find that it becomes natural, and the information that you will have after tracking for a few months will be very enlightening.

I use an Excel spreadsheet to track my expenses on a monthly basis.  If you’re not a spreadsheet kind of person, you don’t have to force yourself (or learn how) to use one.  Start with a blank notebook.  Write each major category of expense – groceries, utilities, rent, entertainment, loan payments – across the top, and handwrite the list of expenses you incurred that month.  Use a new page for each month so that you can look back and see how your expenses look over a period of time.

I spend probably half an hour per month doing it myself.  I don’t use a lot of cash, so I sit down with my checkbook and credit card statements, and fill in my spreadsheet.  If you use a lot of cash on a daily basis, you can keep a list on your phone or a sheet of paper in your pocket to write down expenses as you pay them, so that you have something to reference when the time comes to fill out your spreadsheet or notebook.

I don’t think that you need to track your expenses forever.  Just a few months will give you a very good idea of where your money is going.   After that, it’s a great idea to keep going so you don’t lose the habit, but once you’re comfortable with where it’s going, you can probably take a break until you have some kind of life change – you move out on your own, go back to school, or get married – or until you start to feel like your money is disappearing and you’re not sure where.

Once you know where your money is going, look at how much you’re spending in each category. How does it compare with what you’d like to be spending?  Do you feel good when you look at the amount you’re spending on going out, your cell phone, travel? How about gifts and charity?  Do you want to be spending more in one area?  Less?

If you pay attention to where your money is going, and make active decisions around how you spend your money, you will be using your money as a tool to make your life better.  Isn’t that the goal?


“Your vision will become clear only when you look into your heart.  Who looks outside, dreams.  Who looks inside, awakens.” – Carl Jung