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It’s easier than you think. I tried it myself, and in the first 30 minutes, I set myself up to save over $600 this year.
Time Required: Less than an hour up front, and then a few minutes once a week.
Why Track Your Cash Flow? With so many expenses auto-charging (hello, subscriptions) and the magic of digital wallets, it’s easy to lose sight of the money black holes in your life. (One of my black holes is Amazon, hands down.)
What I tried: I used a budgeting app to link my bank and credit card accounts, and took a look at my spending for the past 30 days using the app’s categories. I found two subscriptions that had gone up in price and renegotiated them, saving me over $650 per year. I also targeted some categories where I can back off. (Looking at you, Instacart.)
How long did it take: Linking my accounts and tinkering with categories took less than an hour, with the biggest headache being finding all my passwords. Once I had everything organized to my liking, it was quick to work through my major spending categories, and it was easy to see where I was headed. It takes less than 10 minutes a week to check things out.
What worked: This method worked for me because I’m mostly a credit card user, so most of my transactions are electronic. If I were to spend more money, there would be a big difference in my data picture.
What didn’t work: Because my husband and I use different credit cards, my current snapshot only includes my transactions. If I were looking for more of a home picture, I would need to log into his accounts as well.
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How you can try it yourself:
- Select a tracking method. Consider how you will be able to track your expenses. This could be pen and paper, a computer spreadsheet or a budgeting app that allows you to link your various accounts. And hey, NerdWallet’s app even has a cash flow feature where you can see your expenses and income in one place. The best method is the one you stick with, so give it some thought.
Select a broad category. If your tracking method doesn’t automatically label the categories for you, assign your transactions yourself. Try common spending groups, such as housing, utilities, transportation, and entertainment.
- Check for patterns. Are you spending more than you think on food delivery or delivery services? An expense rating allows you to see where you’re going.
- Set a goal or two. Choose a category where you want to spend less, and set a concrete intention. (Example: Spend $50 less per month on entertainment.)
Check in regularly. Once a week, check in to see where things stand. Still spending more? Adjust and try, try again.
Keep in mind:
- Make goals realistic. Going from significant expenses to “none” in a category is probably not practical and can be discouraging. Start small.
Keep track of irregular expenses. Some expenses are affected annually or quarterly (think tax preparation services or car maintenance), so keep an eye on them and plan accordingly.
Don’t judge. The idea here is that big money is not a crime. Just observe your expenses and adjust as needed. Small adjustments, made consistently, can improve your financial picture over time.
If you’re following along with us on this monthly financial challenge, start by checking out the tips we’ve shared today over the next few weeks. We will be back next month to focus on auditing the bill.
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