The beginning of the year is a great time for both reflection and planning. We review the things we’ve done well, and we think about ways we can do better in the New Year.  Maybe your finances are something you want to improve. Now’s the perfect time to take a look at your spending habits over the past 12 months to see if you can make changes to make your money go further.

First Things First

Let’s see where your money went in 2016. You can either tackle this the old-fashioned way by collecting bank statements and using a spreadsheet to record transactions, or you can use a helpful tool like to gather your spending data for you.

The key part here is to make sure you include every expense. Merely including monthly bills and major expenses will not be enough to show your true spending habits.

Create Categories

As you import your spending, start categorizing your expenditures. You’ll want to have enough categories to see where your money is going, but not too many to manage.

Here are some examples of categories you may want to use to start out:

  • Home
  • Auto
  • Food/Dining
  • Health
  • Gifts/Charity
  • Entertainment
  • Pets

If you’re using a tool like Mint, they’ll provide you with basic categories and you can add custom categories. Just be sure to double check that Mint correctly assigns your transactions.

Time to Reflect

If you’re like most of us, you’ll probably have some personal commentary as you look at your spending. Whether it’s “kudos!”, or “I need to check myself before I wreck myself,” there’s always room to improve.

You may not be able to do much about your fixed bills like rent and utilities, but you might be able to cut your dining expenses down. With each category, ask yourself if you could cut costs in that area.

What’s Next?

Whether you know it or not, you’ve just laid the groundwork for creating a budget! We will go over making a budget next month, so keep tracking your expenses and continue looking at where your money goes.