Do you know how much cash comes in each month? Do you know how much cash leaves every month? Do you know much you spend on groceries, gas for your car or even your mortgage?
I have used Quicken software since the mid-90's when I bought my first computer. Quicken lets me assign every transaction that I enter to a category. Except for the cash allowance that we allot ourselves each month, every dollar that comes in or is spent is assigned to a category. We have around 20 categories.
I work a budget around what comes in, what we spend and what I would like to spend, hopefully leaving some leftover to devote to more debt reduction or savings. It doesn't always work out in my favor.
Recently, I ran a report in Quicken to see what we spent by category for 2010. I then entered these numbers in Excel to get the percent to total for each category. Yes, I am a total nerd!
I wasn't surprised that our mortgage was our number one category at 19% of our spending. But I was surprised that the "Household" category was 9%. Our "Household" category could be anything from light bulbs to major home renovations.
I have a little investigating to do now. Thankfully, I can run a report that will list all of the transactions that I tagged as "Household". I'll be doing that immediately. It's been a long year and I obviously have forgotten about some of the purchases.
The Road to Financial Freedom
Do you want to head down the Road to Financial Freedom? Great, but if you answered NO to my first question in this post, I'm afraid you might end up spinning your wheels.
We have to know how much money is coming in and where it is going. Unfortunately money doesn't just grow on trees for us to use to reduce our debts or increase our savings. We have to either increase our income or reduce our spending. The latter always sounds really painful, but if you track your spending and know where the money is going, there might be some red flags that will make the job a little easier.
How do you track your cash flow? Let us know in the comments.
If you would like to receive FREE updates of FBS, there are four ways to do so:
- through your RSS Feed
- have updates sent to your email,
- become a fan and 'like' FBS on Facebook
- become a Twitter follower