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Basic Step #3
Know Where Your Money Goes

bag of money surrounded by various images of what money can be spent on

It is possible to gain control of your financial situation, but first you must recognize where your money goes. Start by jotting down everything you think you spent money on last month. Next, locate your most recent bank and credit card statements to see what you actually spent. Be sure to note everything you bought and how much it cost. Include rent, car insurance, groceries, small purchases such as coffee or snacks, and fees from your bank or credit card. Use the Spending Detective worksheet to get started.

Plug Spending Leaks

Once you see exactly how you spend your money each month, you probably will notice areas where small amounts of money seem to disappear. These are called spending leaks. Examples of spending leaks include buying expensive coffee drinks daily, eating lunch out, and making impulse purchases. While it may not seem like you're spending much at the time, these leaks can add up to quite a bit of money over a month or year.

Once you've identified your spending leaks, you can determine ways to plug them by making small changes in your habits. For example, if you buy lunch at a restaurant or cafeteria every work day, you probably spend at least $10 each time. That adds up to $50 a week, $200 a month, and $2,400 a year. If you weren't spending this money on lunch, you could use it to help accomplish your life goals, such as paying for your child's education or your own retirement.

To learn strategies for tracking your monthly expenses, download SAM’s Budget Worksheet and take SAM’s free Spending and Saving Basics course.