One of the best things you can do for your finances is to start tracking them. Being aware of where your money is going, and what it's doing, is the first step to taking control of your finances, and getting things in order.
If you haven't been tracking your finances, now is the time to get started.
Be Aware of What's Happening
Awareness is the first step to understanding what is happening with your money, and even in your life. In many cases, we complain about how our finances are in a shambles, but we aren't actually aware of what is happening with them. Once you take a close look at what is happening with your finances, and once you acknowledge where your money is going, it's possible to see where you need to make changes.
This means that you need to start out by tracking your finances. You don't need to make any changes right now, but you should start tracking your finances immediately. That way, you will have a better handle on what is happening in your world of money.
How to Track Your Finances
Realize that you need to track everything for at least one month (but two or three months is better) in order to have an idea of what is happening with your money. Whether it's a $5 cash purchase at the coffee shop, or whether you use your debit card to buy $50 worth of gas, you need to see exactly what is happening with your money.
Go Low Tech – Pen & Paper
If you want to get the best idea of what is happening with your finances, the low-tech pen and paper method is a great way to go. Keep all of your receipts, and at the end of each day, write down how much you spent, and each thing you spent it on. Asking for a receipt, even when you pay cash, helps you remember all of your little purchases. You might be surprised at how quickly it all adds up!
Use Budgeting Software
You can also use budgeting software. There are programs like You Need A Budget or Tiller Money that allow you to enter in your expenses, and then see a graph that breaks everything down into different categories. This can provide you with a great visual related to what you are spending, and give you a quick and dirty overview of where your money goes.
Online Financial Aggregators
There are also programs that automatically track your spending, since you connect them to a bank account. Programs like Mint or Personal Capital can help you see what is happening after the fact, but they don't always give you a good picture of where your cash is going (since you have to put that in manually). Mint and Personal Capital are great for an overview, but if you really want to get down to the nitty-gritty, and really connect with the way you spend your money, the pencil-and-paper method is great. Use that to track your finances, and then shift to a more high-tech method once you have a plan together and it's more about monitoring.