taking stock
Where Does Your Money Go?
Before setting up a financial plan, it helps you to know where your money is going. A spending diary is one tool to help you achieve this goal. How does it work?
- Check six months of your bank statements to see where your money went.
- Ask your friends and family members how they spend most of their income.
- Keep a written record of how you spend money for a set period of time.
“C” is correct. To do this, get a small notebook and carry it wherever you go. Write down each time you pay money out. Record the date, the amount, what it was spent for, and the method you used (i.e., check, cash, credit card, etc.) Once you’ve tracked your spending, analyze your entries: Where does your money go? Is the amount you’re spending within your means? Are there areas (eating out, beauty treatments, etc.) where you spend more than you thought? Are many of your purchases “impulse buys”? How can this information help you make better money management decisions?