While it is easy to figure out how much you pay in rent and car payments, it is much more difficult to tabulate cash expenditures. While those may only be a few dollars a day, those expenses add up and can doom even the best-though-out budget.

A Piece of paper in your wallet and a pen is all you need

However, there’s a painless way to figure out what you actually spend, and it doesn’t take any longer than five minutes a day. Carry around a piece of paper in your wallet or a notepad, and write down what you spend during the day. At the end of the day, you can total up the expenses and see exactly what you have spent.

I know of a few apps on mobile phones which allows you to insert your expenses into the app and then it will automatically tabulate the daily expenses and monthly expenses for you. You can even arrange the separate expenses into different categories like food, transport and etc. Whatever it can help to ease your tracking of your expenses, you should do it.

If you do this each day for a week, you will have a good estimate of what you spend and be in a position to develop a realistic budget.

Little expenses do add up

It can be quite tedious to track expenses, especially little cash expenditures. While most people don’t want to keep track of their receipts for cash expenditures such as the bus, lunch, or other incidental expenses, try doing this for just one day to see how relatively painless it can be.

Those expenses may be small, but they are important. While you may dismiss your lunch or soda as inconsequential, those expenses add up to a relatively large amount over a month. For example, seven dollars spent on lunch and a drink each of the twenty working days a month adds up to $140 that month.

Once you know what you spend each day, you are on your way toward putting yourself on a firm financial footing. If you have significant financial goals, such as purchasing a house, building a retirement nest egg, or paying off credit cards, knowing what you spend is the first step to accomplishing those longer-term goals.

Don’t give up

Whatever you do, don’t get discouraged. Taking one constructive action to improve your finances is better than having great goals and doing nothing. If you can spend five minutes reading a column of the newspaper, why not spend another five minutes a day to track your expenses, so that you can move closer to achieving your financial goals?

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