You may already be aware that you need a working household budget to pay down debt and achieve other financial goals. But have you given some thought to how you can make your budget most useful?
One simple but essential habit that you must adopt to balance your budget and get the most mileage out of each and every dollar is to write down your spending.
“People are often diligent in allocating amounts towards different expense categories when it comes to creating a budget (e.g. rent/mortgage, groceries, entertainment, transportation, etc.). What many people fail to do is to put the same effort into tracking their spending,” says Jeff Schwartz , executive director, Consolidated Credit Counseling Services of Canada.
“Tracking your spending is as important as setting your spending limits. It’s the best tool that you’ve got to measure the effectiveness of your budget and to identify areas for improvement”, says Schwartz.
Why it works
When it comes to budgeting, the simple act of writing down and tracking your spending habits will make you more aware of both the fact that you are spending- and where you are spending money. Putting it in writing also makes you accountable. If your budget has suffered from unnecessary spending, this will shine a light on what (and how) you need to change.
Get some perspective
Take your morning coffee that you grab on your way into work for example. It doesn’t seem like a lot of money day-to-day, but if you see how much you are shelling out daily over the course of a month, you might be surprised. Want an even bigger eye-opener? Multiply that amount times 12 to see how much you are spending over a year.
You’ll probably also be more motivated to change when you can easily see how cutting back in certain areas can really assist you in staying on track with your budget.
Get your spouse involved
It’s not unusual for one spouse to be a saver while the other is a spender. If your common goal is to pay down debt and live within your means, you’ve got to get on the same page.
By tracking your spending, you can show your spouse in very compelling terms how much is being spent, on what and how that compares to what you are bringing in for income. It’s about creating context. It’s hard to argue with the facts once they are laid out in detail- in writing.
Keep a notebook and pen with you at all times, or scribe your spending on your phone. Make sure that you’ve got a method to record each and every nickel as you spend it and that you use it consistently.
For every purchase you make and for every bill you pay, print out or collect a receipt. In our paperless society, this may seem a little old-fashioned, but this is all about creating visual aids (at least in the beginning) so that you can most effectively monitor your spending.
Set up a filing and tracking system that works for you (spreadsheet, a budgeting app or a ledger notebook). At the end of the month, input your spending. Does it match your targets? Why not?
After a few months of doing this, you’ll get a good idea of where your money is going and how you can streamline your budget to work better for you.
Are you having challenges setting a budget that works for you so that you can pay down your debt? We can help. Call one of our trained credit counsellors at or get started with our online debt analysis.