2021 money challenge: How to evaluate your spending so you know where your money is going (2024)

FAQs

2021 money challenge: How to evaluate your spending so you know where your money is going? ›

To get the most accurate snapshot, pull the past 12 months worth of credit card statements and/or checking/savings account statements. Some banks and card issuers may let you download a yearly review of all your transactions organized into charts and graphs so you can get a clear look at your total annual spending.

Get a receipt for everything you spend and put it in a box or folder at the end of every day. Add it up at the end of the week. Categorizing expenses (food, entertainment, gas, etc.) will help you to understand where your money is going. Carry a small notebook and jot down expenses as you spend your money.

Once you've totaled up your yearly income and expenses, subtract the expense total from the income total to get the difference. It's a simple step that can reveal a lot about your spending habits. If the result is a positive number, you're spending less than you earn.

If you aren't watching your expenses closely, you probably won't catch issues as soon, leaving your money at risk. Tracking your expenses helps you monitor your money and notice abnormalities early so you can protect yourself.

The 50-30-20 rule recommends putting 50% of your money toward needs, 30% toward wants, and 20% toward savings.

Review your paper or online statements for your credit and debit cards when they arrive each month. They provide a detailed report of exactly how much you spent, as well as when and where you spent it.

There are many tools available to help you track your spending. One popular option is using a budgeting app. You can also use a spreadsheet or get to basics by using a pen and paper. Whatever method you choose, make sure it's something you'll stick to and is easily accessible.

One popular budgeting option is to follow the 50/30/20 rule, which requires you to allot a designated portion of your earnings to savings, wants, and needs. This method is also called “the balanced money formula,” as it can help you strike a healthy balance between saving and spending.

Subtract your monthly expense figure from your monthly net income to determine your leftover cash supply. If the result is a negative cash flow, that is, if you spend more than you earn, you'll need to look for ways to cut back on your expenses.

Keep an expense and budget notebook that tracks your spending. The simplest way to track your finances is to record each transaction in a notebook. Choose to use the notebook for spending only, or opt for a more detailed approach by logging how much you want to spend and what you end up spending.

Why track my spending? ›

The main reason you should track your expenses is to identify and eliminate wasteful spending habits in your financial life. Moreover, consistently tracking your expenses will help you maintain control of your finances, and promote better financial habits like saving and investing.

Personal finance expert Dave Ramsey says if you're going through a tough financial period, you should budget for the “Four Walls” first above anything else. In a series of tweets, Ramsey suggested budgeting for food, utilities, shelter and transportation — in that specific order.

Zero-based budgeting (ZBB) is a method of budgeting in which all expenses must be justified for each new period. The process begins from a “zero base” and every function within an organization is analyzed for its needs and costs.

The 50/30/20 budget rule states that you should spend up to 50% of your after-tax income on needs and obligations that you must have or must do. The remaining half should be split between savings and debt repayment (20%) and everything else that you might want (30%).

Most unclaimed money is held by state governments from sources such as bank accounts, insurance policies, or state agencies. Search for unclaimed money from your state's unclaimed property office. If you have lived in other states, check their unclaimed property offices, too.

You can check your credit file to find out who you owe money to. It will show if you have any defaults, County Court judgments (CCJs) or decrees. This is the first step in dealing with your debt problems. Collect the details of your debts and get free online debt advice.

Yes, money can go missing from a bank account. This can happen due to unauthorized transactions, bank errors or automatic deductions like fees and charges. It's important to monitor your account regularly to quickly identify and address any discrepancies.