Monday, January 16, 2012

Where is your money going?

"I just don't know where all of my hard earned money goes."

"I have no idea how much money I have.  I only find out when I get my bank statement each month."

"I opened my credit card statement and I could NOT believe I spent THAT much on eating out this month!"

"I want to start budgeting someday."

"I have so much debt I don't know how to pay it off."

How familiar do these statements sound?

You really need a budget.  But before starting a budget, you need to get a grasp of how much money you have, and where that money is going.  Most people don't know how much money they truly have and even how much debt they are truly in.  Most people spend money blindly and don't have any plan of action on how to save or invest their money.

Think of running your life like a finely tuned and efficient business.  Would you shop from a store that didn't keep track of inventory?  Would you invest in a company that doesn't keep track of profits and losses?  If you want to improve your finances, this is one of the first steps.  If you don't document and monitor where your money is going, you will have no idea how to control your money.

"But I don't have TIME to budget."  Yes you do.  I'll show you how easy it can be.

"But I don't want to bother with a budget."  Get off my site.

There are many different ways to track your spending.  I prefer 4 methods (I'm a freak).  But for now, I'll recommend my 2 favorite methods.  You can email me for the other 2 methods. is the easiest way to keep track of your budget.  You simply input a login of all of your accounts: checking, savings, credit cards, IRA, 401K, investments, mortgage, life insurance, etc and then mint will systematically categorize how much you're earning and spending in various categories such as: bills, shopping, paycheck, groceries, dining, etc.  It does this all automatically but does require some fine tuning every now and then.  You can grab the iphone app here.

There are a few downsides to using
- It only posts which transactions have gone through.  For example if you've written a check or scheduled a bill payment, you won't be able to track this expense until the check or bill payment has been cashed.
- Your various accounts may not always sync every time, although usually it works great.
- It's hard to budget your expenses in real time.


Pocketmoney is my absolute favorite budgeting application.  This application gives me the big picture.  I can see exactly how much money I have in every account.  I have used this program since my original palm pilot days, then my Sony CLIE days, then my treo days, and now my iphone days.  It is hands down the easiest application that I've found to manage multiple accounts.  And believe me, I have a LOT of accounts.   This application allows me to schedule repeating transactions such as my automatic netflix monthly bill pay.

When I schedule a bill pay or write a check or use any cash, I immediately document it in the pocketmoney app.  This only takes a moment.  I do this right away because I know that I am lazy and I will not sit down and look at my receipts at a later time.  When I withdrawal cash from the ATM or transfer funds between accounts, I document this immediately.

Yes that's correct, I do have 19 accounts within this app.  In fact, I actually have some other investment accounts that are automatic which I do not include in my pocketmoney app.

Yes, I use every single one of my accounts on a regular basis.  I will make a future post about why the heck I have so many accounts and how having multiple accounts actually makes my financial life more efficient and better.

Pocketmoney includes the ability to take photos of your dining receipts after you sign for them.  It also allows for true real time budgeting:

As you can see, I am a huge fan of pocketmoney.  To save you the trouble of scrolling back up, click here.  Yes, the application costs $4.99.  Don't be a cheap ass.  Buy it for the value that it will give you.

This week, start documenting your expenses and income.  God knows you've procrastinated long enough.  You will find that once you start documenting and tracking your spending, it will be like second nature to categorize every expense in it's own category.  Who knows, you might enjoy it.  You will be surprised to see just where exactly your money is going.

Soon, I will talk about the perfect budgeting solution.  In the meanwhile, remember that simply tracking what you spend isn't the secret to saving money just like counting your calories isn't the secret to losing weight.

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