Need A New Years Resolution?, Try Tracking Your Expenses

New Years is right around the corner.  This is typically a time when people take stock of their lives and determine what they want to do better in the coming year.

If you want a financial resolution that is easy to do, consider tracking your spending.  It is very simple.  All you need to do is write down your expenses every day for 30 days.  I started doing it a couple of weeks ago.  Pretty much, I just got a notebook and have been writing down how much I spend and how much I exercise.  Here are the results from before Christmas of this year.

The main idea behind it is that if you track your expenses you’ll have more insight into your spending.  If you can see where your money is going you’ll be able to cut off wasteful spending or better understand how to substitute less expensive options.  In my case, I spent $2.99 at Subway sandwiches nearly every day in the past two weeks.  So I checked my credit card statements and it turned out I’d spent at least $2,000 in the past year and a half at Subway.

I would have been better off buying sandwich fixing and making my own sandwiches at home. I’m planning on keeping it up for 30 days and seeing what the results are.

This would be a great new years resolution if you want to improve your finances.  Its easy – you just need a 99 cent notebook and you only have to write down your spending. It takes about a minute a day and you get some insight into where your cash is going.

To give credit where it is due, I got the idea from Darren Hardy’s The Compound Effect.  Hardy is an advocate of the idea that small incremental changes along with hard work add up to large results over time.  He argues that 30 days is about what it takes to develop a new habit, and to see the results of incremental change you need to do something repeatedly for several months. His favorite metaphor here is an airplane. If you change course by 1% at the start of a journey, the arrival destination radically shifts.

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