Managing your money should be as easy as running a bath. Just as you would turn on the taps and make sure more water flows in than out, with your money you bring in the income and make sure more stays in than goes out.

If you forget the plug and spend more than you earn, the bath never fills.

But even if you put the plug in, you may still find that the bath never fills very high for very long. Do you find yourself wondering where your money is actually going?

If you’re like me, your bath may have sprung some leaks – your everyday spending keeps draining it and stops it from filling as high as it could.

So much month left at the end of the money

It's practically impossible to remember what we spend money on every day. It's even harder to keep a running tally of what we've spent on one kind of thing over the last week or month, like takeaways, snacks on the go, groceries or clothes. Can you remember what you spent on movies in the past month, for instance?

Little by little, our spending here and there on things we don’t even think about makes that bath leak without us noticing.

What we all need is a way to see where our money's flowing. That's what money tracking is all about. Tracking your spending can give you a clear picture of what's really happening with your cash.

Four ways to track your money

Now there are different ways to track your money and follow those funds. You can:

  • Carry a small notebook and write down how much you spend every time you buy something
  • Use an app to record everything you spend on your phone or tablet
  • Keep receipts and then write down your expenses at the end of each day
  • Use EFTPOS for everything you buy and then go through your statements

One trick I’ve found is downloading the last three months of statements online. I can easily sort through everything I’ve spent. Since we all tend to return to the same places over and over to shop, it’s simple to see how much I’m spending on entertainment or at the local dairy.

The key is to find a way that works for you and stick to it. You'll be glad you did.

The more accurate your money tracking is, the sharper the picture you'll see of where your money's flowing. It pays not to miss a thing.

As you record each expense, group them by what they are for, like groceries, takeaways, entertainment, petrol, transport fares, clothes, gifts, household bills– whatever you typically spend money on. If you're using a notebook or spreadsheet, make a column for each, so it’s easy to add up.

Get ready for a real eye-opener

When you do your sums, get ready for some surprises. You may even be shocked at how much you spend on some everyday things.

But wherever the surprise leaks are, that's where your opportunities are, too.

You'll be able to see where your money is actually flowing and make some important choices about where you want your money to go instead.

And as you plug those leaks, you'll see your bath fill.

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