Step 2 of 5 Money Management Steps - Track Your Expenses

I'm not going to sugarcoat this, this is the step that requires the most discipline.

But everyone should track their expenses.

How many times have we heard this question,  "Where did all my money go?" ?

As human, we're so bad at estimating things. Without actual records we usually underestimate how much we actually spend on anything.

Business owners know this, that's why they price their products and services using something like $399. We naturally take the first number, 3, and think that it's around $300. However, it is actually $400.

Recording expenses make sure that we can be accountable on how we spend our money.

This also prepare you for the next step in money management levels, budgeting, that we will look at next.

There are multiple ways to track expenses. 
1. My parents use pen and paper.
2. I use worksheet application in my computer.
3. Andrae from Learned Wealth Financial Coaching uses a mobile app.

How do I track my expenses?

Step 1. At the beginning of a month I look at my credit card statement online, and I put every transaction to worksheet.

Step 2. Then next to the list I put my categories, and on that category I sum all the transactions that fall into the category.

Step 3. The total of the transaction list and the category list should be equal.

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