Good Question: How to find out where your money goes

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Question: It seems like I'm running out of money before the month is over. I have enough to pay bills, but it seems like I'm coming up short. What's the best way to figure out where my money is going?

Answer: We have all asked ourselves this question -- where does my money go each month?

We know what our income is and what our fixed costs are and think we should have money left over each month instead of coming up short. The only way to find out is to track your expenses.

Tracking expenses helps you identify the extra things you're spending money on each month. Sometimes these perceived little extras add up to big expenses.

For example, instead of packing your lunch, you spend about $7 five days a week and buy your lunch at work, which amounts to $140 each month or $1,680 each year you're spending on lunch. Bringing your lunch from home would result in a significant cost savings and would mean more money in your pocket at the end of the month.

Tracking your expenses for a month will also give you an accurate estimate on your variable expenses, like grocery and gas costs. If you're trying to stick a monthly budget, your budget is only beneficial if your expenses are accurate.

You can track your expenses several ways. One way is to carry with you a notebook and jot down everything you're spending money on. Another way is with an envelope.

Ask for a receipt for all purchases and place the receipts in the envelope. Anything you don't get a receipt for, write down the purchase and the amount on the envelope. Total the receipts at the end of each week or at the end of the month.

Consider making tracking your expenses a long-term activity. Set up an spreadsheet and track your monthly expenses for a longer period of time, at least six months to a year.

Identify any periodic expenses, such as water and sewage bills, taxes, insurance or registrations for different activities your children participate in.

Try to determine how much each year you are spending on periodic expenses. Divide the total by 12. The amount you come up with should be the amount you set aside monthly toward all of your periodic expenses.

Tracking expenses over the long term can also help you identify patterns in your spending, which you might want to change.

For instance, if you spend a lot in the week leading up to the holidays, you might want to start shopping earlier, so you're not faced with all of the expense at one time.

Tracking expenses will also help you identify ways to save money. The $10 a week you spend on gourmet coffee may not seem like a lot at the time, but over the course of a year that's $520. Do you want to spend $520 on coffee?

While tracking expenses can seem like a tedious exercise, it will answer the question of where your money is going and it will most likely enlighten you on ways to spend your money differently.

Heather Murray is manager, regulatory compliance and education, for Advantage Credit Counseling Service (dba Consumer Credit Counseling Service). For more information about the agency's services, please visit; to access the free online budgeting tool, go to If you have money or credit management questions, you can email Ms. Murray at Please provide your name, address and daytime telephone number with all inquiries. Ms. Murray tries to reply to all inquiries but, because of the volume of questions she receives, she cannot always respond.

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