Gain Control Of Your Money With This Simple Habit

My senior year of college, I moved off campus with four other girls. I worked a regular job during the summer - but most of it went to tuition and books. So living on my own meant I had to ensure enough of my work study and summer earnings would last the entire semester.

That year, I started a habit I still practice to this day that helps me keep control of my money.

So what is this simple habit?

WRITE IT DOWN - EVERY PENNY, EVERY DAY

I found keeping a journal of my spending to be very fruitful. My primary expenses were rent, food, and gas - plus a little bit of fun. I used a simple college ruled notebook (since I write pretty small). At the top of each page I wrote the name of an expense category - Food, Clothing, Gas, Entertainment, etc.

Each and every expense got written in my notebook along with the date of purchase. I knew exactly where each dollar was going and how much I had spent.

Today, you will still find me practicing this habit - perhaps with more sophisticated technology now!

So - Why take the time to write down your expenses?

For one - numbers don't lie. When you write it down, you can't deceive yourself. There is something about writing our purchases down in black and white. You see the reality of where your money is going - and how much is spent on each item.

Two - It can change our spending habits. As we see the undeniable truth of how we are spending our money, it can affect our decisions. And sometimes, knowing we have to write it down makes us think twice. I've had many of my students tell me this happened with them.

Three - We can begin to plug our 'spending leaks'. When we review our spending, we can start to identify the spending habits that our taking away from us reaching goals and building a savings fund.

I whole-heartedly believe this simple practice will transform your financial future.

When I ask my class or money coaching clients to track their income and spending, they are often astonished at how much they spend on small purchases. Cigarettes, eating out, vending machines, or even late fees. This practice has even led to smokers kicking the habit over-night!

I just love hearing these stories. Just think about it - a pack of cigarettes is at least $6 a pack. I've had folks smoking a pack a day - but to make the numbers easy - let's assume 5 packs a week.

5 packs X $6 per pack = $30 per week

$30 X 4 weeks = $120 per month

$120 X 12 months = $1,440 in one year!!

And for fun!

In 5 years... that's $7,200 buckaroos!

Wow! No wonder some folks quit cold turkey!

Now, the important thing to remember when you start to plug those leaks - Have a plan for what you will do with that savings. If you don't, it can easily be eaten up by some other little cravings.

What would you do with an extra $120 a month?

Save for a down payment on a house? Save up to buy a nice used car with cash? Maybe pay down some debt? And yes - It's okay to say you'd save up for that dream vacation you always wanted to take! The opportunities are endless.

But please note- that's just one little $6 expense. What if you add up the vending machine expense of $5-10/week? Or that latte from your favorite coffee shop?

What sacrifices are you willing to make to find a little extra cash? I am not asking you to completely eliminate any expense - in fact I recommend you start by choosing one small item - and reducing your consumption by just half or a third. Just commit to something.

And Then - have a plan for that 'extra' money you find in your bank account.

So, are you convinced to try this new tip?

Download my Spending Tracker here, or grab a notebook of your choice to get started. You will need one printout per week. Feel free to scratch through, or white-out any categories to make them fit your needs.

Oh, and a little confession: While this is a 'simple' task, it does take time and a lot of discipline. But don't get discouraged if you miss a day or two. It's about becoming more aware of where your money is going. Each and every time you do this exercise, you are one step closer to gaining more control of your money - instead of it having control over you.

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Here's the challenge:

Over the next 4 weeks track every penny that you spend:

1. Write down every expense: Record the date, category, and amount.

2. Be sure to include bills, debt payments, money you give to others, etc.

3. Then, Add up each Category (if you do this as you track it, it saves some time when you create your spending plan)

4. Finally - pick just one item you feel you can reduce or eliminate over the next month

5. Decide: What will you do with the new found money?

And guess what? After these four weeks, you are already prepared for the next step! Creating a realistic spending plan.

Let me know how this challenge is going for you in the comments below!