Have you ever gone to the trouble of keeping track of your money using a web-based personal financial management service like Mint.com? Or maybe you used Personal Capital, but didn’t take away real actionable steps to save money? To make sure your money tracking efforts result in change, here are three things that you want to do.
Figure out where your money goes every month
The first thing you want to do before you start tracking is to make a best guess about where your money goes. This way, once you do start tracking, you’re going to see any discrepancies. You’re going to say, “Oh I thought I spent $800 a month on groceries, but come to find out we spend $1,200.” That’s going to give you some ideas of where you want to start looking to actually save money.
Separate your money into categories
You don’t want to lose the forest for the trees. When you start tracking, there’s a lot of categories that you can put money into. The more you separate it out, the easier it is to get lost in the details. What you want to do is think about your categories in advance and use the smallest number possible. When you have fewer categories, it’s easier to see where the problem is.
When we’re looking at our money, we vaguely remember all the things that we spend our money on. So when we look at the big picture, we’re not as subject to what I call “habit blindness.” This is the vague recollection that you did something and none of it seemed too expensive. You might read your statement and think, “All right, $17 on lunch, stop to Target, did all the things. None of that is going to stand out as a problem that you need to address.
But then you look at it as the entire big picture. You can see that, “Oh, holy crap, I spent $800 shopping this month.” Or “Oh, holy crap, I’m way off of what I guessed.” That’s why you want to do that.
Actions vs. Savings
Now, the third thing is tricky. What you want to do is you want to consider your habits and your actions rather than just saving dollars and cents.
This matters because we can get into the mentality of, “Oh, I spend too much money here or there.” The next thought is, “I need to buy cheaper crap.” That’s the number one thought that gets through your head. You think you need to shop more to get the best prices on things and you need to buy the cheapest crap possible.
You can only spend money at stores and save money at banks. 
Now, that’s usually not the best answer. In fact, the more time you spend shopping, the more money you’re going to spend. Retailers have the idea that you can ‘Buy More, Save More’ and we’ll shop for the best prices. That’s how we get the idea that we can save money while we’re shopping, but it’s just not true. You can only spend money at stores and save money at banks. The best that you can do at a store is walk in and spend $0. Right?
Here’s what you want to be thinking about:
  • What habits do you have that are inefficient?
  • Are you taking several trips to the grocery store every week?
  • Are you spending a lot of time, mental energy, and money there?
  • Are you doing things that are inefficient?
Let’s say, for example, my husband smokes cigarettes. When I started tracking our transactions, I realized that he was going to the gas station 31 times a month. And I realized that means it takes him 9 hours to buy cigarettes. On top of that, every single time he goes in he’s usually buying a pack of gum, red bull, or a snack for the kids. And it’s that inefficiency that’s really the problem. Learn more and stop wasting money on these four financial drains. 
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