Track expenses daily to keep the budget in line

Last Friday was the final Friday of January and you know what that means: payday. Like I always do on payday, I woke up and texted my bank for a balance just to make sure I wasn't fired two weeks ago and hadn't been told. The good news is I still have a job. The bad news was that I had a balance in my checking account that was short of what it should have been after payday.

Fortunately, I'm not in a position where that means I can't make the rent. But it does mean I spent over my budget between this pay and the last and in fact, I've probably been less disciplined about my spending for a few months.

So this month I'm going back to the drawing board with an exercise I haven't done in a few years: keeping a running tally of all my spending for 30 days. This is something I think everyone should do at least once every couple years, or when you make a significant change to your budget. It's easy to make a budget by estimating fixed expenses like the rent, light bill, cable and car insurance. But seeing everything you spend on paper, including small things like the junk food you bought at lunchtime, shows you how much money you're really spending and more importantly, where you're wasting some money.

This past weekend, I spent about $220 that wasn't in the budget, for example. While that money came out of disposable cash that isn't set aside for any particular purpose, spending like that on a regular basis without tracking it can wreck a budget.

So if you're not tracking your expenses, you should try it. Get small notebook and keep it with you every day for a month. Every time you spend money, on anything, write down the item, the date and the exact cost. Add it up at the end of the month and find out how much you're really spending.