Track spending accurately to take control of your budget in your effort to maximize your retirement provision savings. In fact, it is a good practice to track your spending accurately even after retirement.
I recall that we, as a young married couple, struggled to make ends meet. Fortunately credit cards were not freely available at that time and most expenses were paid in cash or by cheque.
We used the time honored method of budget-envelopes to track our spending! I believe some people are using this method even today. We basically marked an envelope for each budget item and on payday I withdrew cash according to our budget. The exact cash amount for every budget item was put into the corresponding envelope. As each envelope's cash was used, a note of the expense was made on the envelope and the balance still available calculated. As I recall it, this simple tool worked well to control our spending.
It is my opinion that a credit card offers a very convenient method of paying for your expenses, but it is also a very dangerous monster to control when you are on a severe budget. I know of several households where credit cards were banned. When you start spending money that you haven't got, it is very difficult to catch up. You practically become a credit slave.
Today's technology make it easier to track your spending. There are several free iPhone apps available that allow you to record your spending the moment you spend the money. It calls for steely self discipline though. However, no other method of tracking your spending can give you the same accurate data.
Except the little notebook of course! Each budget item has a page. As you make a payment, you quickly flip to the relevant page, enter the amount and deduct it from the running balance to get the balance available on that budget item.
Most bank accounts and credit card accounts today can be viewed online and downloaded into a spreadsheet. It is then a simple operation to allocate the amount to a budget heading on your PC. Caution though, some debit or credit card transactions might still be in the process to be cleared and the balance you see in your bank account might not be the true amount of cash available.
To track your spending might be uncomfortable, even annoying, in the beginning. But it quickly becomes a lifestyle and it gives you control over your spending.
The budgeting spreadsheet I recommend as a model could easily be adapted to reflect your actual monthly expenses. It is then easy to compare your spending against your budget.
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