Today. Today is the best time to improve your finances.
If you’re joining me in a no spend month, it’s the perfect time to tackle those financial tasks you’ve been putting off. Even if you’re not doing a no spend month, there’s no time like the present. Pick just one thing to do this week, commit and follow through.
Track Your Spending
I started tracking our spending (down to the penny) after reading Your Money or Your Life
A no spend month is the perfect time to start tracking your spending and expenses. Emily over at JohnJaneDoe said her no spend month was the opportune time to start tracking expenses since she didn’t have as many expenditures to record that month.
How you decide to track your spending is up to you. And you might have to try a few different methods before you settle on one that works.
For years, I’ve been using my own trusty spreadsheet, but I also use a couple of the methods mentioned below (Overkill? Maybe, but it works for me!).
Here are a few spend tracking options:
Start a spending journal. Do you get to the end of each month and wonder where all your money went? The spending journal can help you answer that question. This is the easiest way to see patterns and leaks in discretionary spending.
My awesome friends, Mr. and Mrs. Groovy, have this expense tracking tool they use to track their expenses. Try it out – it’s free!
Start spend tracking and develop a budgeting system simultaneously with You Need A Budget (YNAB). My friend, Linda, at Brooklyn Bread says YNAB helped her get her finances and spending under control. It’s less a budget, and more a tool for giving “every dollar a job”. Check out my review (and get three months free).
Personal Capital offers so many great financial tools – and they’re free. I use the net worth and expense tracking tools. Really, after you get the initial set-up completed with Personal Capital, they do the rest for you (the only thing you may want to do is re-categorize some of your spending).
Calculate Your Net Worth
Why is net worth important? Net worth is the big picture. It’s the complete report of your current financial health. Your month to month finances don’t tell the whole story.
Calculating net worth can sound complicated, but the math is actually quite simple.
Assets – Liabilities = Net Worth
Assets are the things you own. They include things such as your house, car, checking and savings accounts, retirement savings, and any other items or accounts you have of any value.
Liabilities are what you owe. This includes any loans, such as your mortgage, student loans, credit card balance, auto loans, HELOCs and any other money you owe.
You may not like what you see, or you may be pleasantly surprised. Either way, being in the know is the best way to gauge what you need to do to improve your situation. Having that big picture can provide the motivation you need to eliminate debt or save even more.
Side note: Alan and I first learned about our net worth 18 years ago when a mortgage lender informed us it was negative.
If you don’t want to do the math yourself, Personal Capital has a free net worth tracking tool. Bankrate also offers a handy net worth calculator.
Lower Your Expenses
I know $20 a month doesn’t sound like much, but that’s $240 a year. If you cut 5 expenses by $20/month, you will save $1200/year. What could you do with an extra $1200 each year?
Lowering recurring expenses, such as phone bills, cable, insurance, or bank fees can save you a ton of money. Go through your bills, look for “extra” charges, and call companies to request a lower rate and eliminate the extra charges.
Don’t forget about those subscriptions and memberships! Are you getting the full value out of them? Do you use the gym enough to justify the cost? Do you read that magazine each month? Do you play that online game anymore?
With the New Year is a chance to reset your spending and expenses.
Now is the perfect time to start the 6 Weeks to $500/Month Savings Challenge.
Save More
Automation works! Set up designated savings accounts for your money goals. Whether you want to save for a vacation, big insurance bills, or a house down payment – automatic, monthly transfers into a savings account will do the job.
Do you have a $2000 insurance bill due each year (I do!)? Set up an account specifically for this expense and send $167 to that account each month. I use Capital One 360 for this – it’s easy to set up and you can automatically set your goals for each account.
Even when I thought I was saving all I could, Digit proved me wrong. I signed up for Digit in June of last year and have saved over $1700 so far. I don’t even miss the money in my checking account. The app uses algorithms to take small amounts out of your checking account and deposits them into a savings account for you (without worrying about overdraft!).
Think you can’t save any more? Think again! 13 Easy Ways to Save
Other Tasks
Clean out, declutter and sell something. If you want/need to spend on something during your no-spend month, why not side hustle a little to have some money to spend!? And, you’ll have clean cabinets and closets. Win-win.
If you haven’t already, set your goals for 2017. Don’t just say what your goals are, really plan out your goals and create accountability. And don’t forget to write them down!
If you aren’t participating in the No Spend Month, it’s not too late! Start when you’re ready! You’ll learn all about your spending habits and save money to boot!
You may not consider a No Spend Month all that “fun”, but it’s incentive to try out new things. Read a book from the library, take a hot bath, get creative with a project or play a game of cards with your partner! Need more ideas? Check out 35 things to do when you don’t want to spend money.
How will you start working on your finances today? What’s the one thing that has helped your finances the most?
This post contains affiliate links, which means that if you click on one of the product links, at no additional cost to you, I’ll receive a commission if you buy products through these links. See the full disclosure here.
Centsibly Rich is a participant in the Amazon Services, LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking to Amazon.com.
Great call-to-action Amanda! There’s no better time to start than today, especially where your finances are concerned. I just finished looking back at our 2016 financials and it was a good year. Now it’s time to figure out goals for 2017.
I haven’t had the courage to take on the no-spend-month challenge, but it is an awesome idea – best of luck to all!
Thanks, Jon! I still haven’t gone over 2016. I did do the net worth, but need to check in on spending and expenses. Sounds like a fun weekend project!
You should try a no spend month sometime!
This month, I’m shopping insurance plans to see if we can find a better rate. Cutting a recurring expense like insurance is a great place to start because it’s a quick win. I always smile when I’m able to get a better deal. 🙂
Our whole “back to basics” approach is, in part, about cleaning up the finances. We’ve focused more on paying off debt than closely tracking grocery expenses. Between Mint and a spreadsheet, we’re putting everything under the microscope to make sure we’re spending on what’s necessary and to find opportunities (like car insurance) to get better rates.
Insurance is on my list too, Claudia. I shop around each year to make sure I’m getting the best price – you’re right, it’s a quick win that can save some serious cash.
I like your “back to basics” approach! You guys have made such huge progress before this – just think of what’s ahead. I love following your journey! 🙂
Nothing has been more enlightening than tracking our expenses. I started doing it right out of college and it had helped immensely knowing where my money is going, why, and what I can do to lower expenses.
I just finished with all my 2016 charts and files and an ready for a new year!
Yes! Tracking expenses has been crucial for us too – though, I admit, I didn’t do it right out of college. I wish I had. Once we did start tracking, it changed everything!
Congrats on a great 2016!
I’m so excited to start a brand new year and make some improvements. I already track my expenses and it’s helped so much with prioritizing spending on things that really matter. On my immediate to do list for new year: get insurance quotes, automate 529 contributions and make a savings plan for the new garage we plan to build.
It’s great the tracking has helped you out so much. I love your “to do” list – lowering those recurring expenses and using automation are great ways to save! Thanks for the comment.
Holy crap, I love this post! And not just because you shouted out my expense-tracking spreadsheet. (Thank you very much, by the way. You made my week. Also, you reminded me that I got to update the spreadsheet’s tutorial.) I love it because the advice is spot on. Here’s the line that says it all:
“[B]eing in the know is the best way to gauge what you need to do to improve your situation.”
Tracking your spending and monitoring your net worth are the best tools you have for being in the know. They’re a pain to start, for sure, but once they become a habit, they really don’t take too much time to maintain. During a typical month, for instance, Mrs. G and I make about 35-40 spending decisions. And roughly half of these spending decisions are automatic (electric bill, water bill, property tax, etc.). So to keep track of half our monthly spending decisions, all we have to do is one cut and paste into our spreadsheet.
Of all the suggestions you made, Amanda, I love spend-tracking the most. Why? Because it allows you to focus your frugal muscles on one aspect of your spending at a time. Without knowing where your money is going, you’re flying blind. You don’t know where to cut spending. But when you see your spending right in front of you, you now have categories and spending numbers to attack. When Mrs. G and I first started to track our spending, we found that we were spending nearly $600 a month on groceries. And this was for two people back in 2004! Since that time, we’ve only rarely spent more than $400 a month on groceries. For most months, our grocery bill is between $300-$350.
This post is an awesome reminder that you have a lot of control over your financial situation. If you want to improve it, you can. But you got to be proactive. You got to track your spending, you got to monitor your net worth, and you got to hone your frugality muscles.
Great post, Amanda. So far it’s my favorite post of the year. I’m sending the link for it to my nieces and nephews right now.
I agree with Mr. Groovy stating that spend tracking is the most important. My wife & I stick to a budget, but, we had to find out how much we were spending first. Plus, off the top of my head I really cannot tell you how much we have allotted for each spending category. But, I do have a good idea of how much I have earned & spent so far this month.
Thanks, Josh! I think in order for a budget to work, you definitely have to get a baseline for your spending. I don’t have set amounts for each category, but I know when a category is getting too high, so I adjust from there.
Mr. Groovy, you made my day! 🙂 And, I’m blushing. Happy to share your spreadsheet!
I agree the two most important things you can do is track spending and net worth. If you don’t know where you are, you can’t know where you’re going. And, you’re right, once you get it set up, it takes very little time to maintain. I probably spend 10 minutes a week on spend tracking and 10 minutes a month on net worth. Easy peasy.
Again, thank you for the kind words, Mr. Groovy! And, of course, for the fantastic advice in your comment. I appreciate you taking the time to write it!
That’s the main thing with personal finance – just getting started! A lot of personal finance is just about removing those barriers to entry and the friction in getting started. Automating is definitely one way to make it so much easier to improve your finances, especially breaking things down into chunks. I do the same thing with Christmas presents, so that by the time Christmas rolls around, I have a big chunk of cash sitting around without even realizing it.
Yes, getting started is the most important thing you can do! Breaking things down into chunks can be so much easier with everything. You could even apply that to getting started – take 15 minutes today to set up a spend tracking method, take 15 minutes tomorrow to input some spending…and so on.
Couldn’t agree more – especially about spend-tracking. It changed our life as well. Knowing where every penny goes helps us to re-route wasteful spending toward meaningful goals. Life-changing!!
Thanks, Laurie! No doubt, spend tracking is life changing!
Great post, Amanda.
I use a program called YNAB (You Need a Budget) coupled with Mint or Personal Finance to keep track of my budget. While Mint and Personal Finance are automated in pulling transactions into their respective online dashboards, I still have to manually enter my data in YNAB. This allows me to better understand where my money is going because of the manual activity that I have to perform. Also, less spending equals less entries I have to enter!
Thanks! I agree, You Need a Budget is great! I also like to manually enter everything – which is one of the reasons I’m still attached to my spreadsheet.
Tracking our spending was definitely the most helpful thing for our finances. We’ve been tracking for over 10 years now, and we know where every penny goes. We can see when and where we’re spending more than before and where we may need to cut back. Most of all, it helps us keep our budget real!
Thanks, Gary! That seems to be a consensus. Tracking spending definitely keeps the budget real!
Tracking spending and net worth have helped us so much see where we were, and they are also great opportunities for Jon and me to talk about goals and habits as a couple. (Not to mention eye-opening for me about how many of my impulse buys were about me instead of us.) Tracking keeps us…on track. It’s also allowed us to see that my job loss 2 years ago could become semi-retirement if we were careful, and keeps us on track to maintain it.
Thanks for the shout out!
Love the point about using the tracking as an opportunity to talk about shared goals. Not only has tracking both net worth and expenses helped us save more, it is the springboard for money conversations between Alan and me too.
I think it’s great you guys were able to leverage your finances to maintain a semi-retirement – just goes to show how powerful tracking can be! 🙂
I think people can be put off starting, or carrying on, with tracking their expenses because all of a sudden, you realise the mistakes you’re making with spending. But, realising your mistakes is the first step to correcting them. Also, tracking your expenses gets easier with time and experience, so each time you review what you can save and how, you already know what you’re spending. 🙂
You make a very important point, Sarah! It is hard to see the mistakes – and may be tempting to stop tracking, or overlook the mistakes. Being honest with your tracking and with yourself is an important part of the process. It’s not always pleasant but, you’re right, it’s the first step to correcting those mistakes.
I’d long heard the quote “what gets measured, gets improved” but I really noticed it in action when I started tracking every penny I spent. My actual spending was much different than my assumptions and memory. Good stuff here, Amanda!
Thanks, Ty! I’m trying to apply that saying to time management this week…hopefully I become more efficient.
Great list for everyone to look through as we start the new year! I check my spending a lot more after I started blogging and it’s worked out great for me. Thank god for Personal Capital 🙂
It’s funny you mention blogging – I’ve trimmed my spending even more since starting the blog and more motivated than ever. Another reason to love blogging! Agreed – Personal Capital is the absolute easiest way to track the spending.
I have to say my favorite tool to improve my finances has been personal capital. I love all their features and especially love their investment tools. It’s fun seeing the monte carlo simulation to see how I’m stacking up for retirement 🙂
Personal Capital has some amazing financial tools! And free too – can’t beat that. I agree, it’s fun to run the numbers to see if you’re on track.