Where to begin?

Let’s pretend for a moment that you’re lost in in the woods. You need to get to your car, but you have no idea where you’re at. Everyone keeps telling you to look at your map, but the map doesn’t matter if you have no idea where you are on the map.

What you have to do first is identify the landmarks around you. Once you start to recognize the landmarks, you pinpoint your location and start to understand your surroundings.

How the hell does this apply to budgeting…

If the map is your budget, the landmarks are your spending. You have to understand and identify your landmarks before you start navigating. You do this by tracking your spending. Every dollar you spend for at least one month needs to be accounted for.

By tracking your spending you are getting a baseline as to where you are starting from - pinpointing your location on the map. When asked to just sit down and write a budget, you probably have no idea what you actually spend in each category.

Write down everything? That sounds daunting.

If you’re like me, you’d be thinking “That sounds great, but I don’t have the time, and I definitely don’t have the discipline to track everything I’m spending for an entire month.” The good news is we live in an age where everything can be done for us using the magic of the internet.

Tracking on the web.

While you could go sift through all your previous bank statements, credit card transactions, mortgage payments, and who knows what else. I prefer that everything be imported for me. Call me lazy, but it’s so easy.

I personally use Mint.com. Every time I swipe my card, someone cashes my check, or my mortgage payment is made, it’s tracked and categorized for me and spit out in an easy to read digital format.

There are other tracking sites that are also highly recommended in the personal finance community. Personal Capital and YNAB are the two others I hear named frequently.