Where did all my money go?

  by Tyler Curtis

by CareyAnn Peterson

Have you ever looked at your account balances and asked yourself, “Where did all my money go?” At the end of the month, it’s a good idea to look back at your credit card transactions and bank statements and evaluate your current financial situation to make sure you are spending responsibly. You may not have gone out and bought a new set of golf clubs or splurged on a trip to the beach, but you might be surprised how quickly some of your routine spending habits start adding up over time.

Lucky for you, many online tools have been developed to make managing your budget simple and easy. One great free resource is mint.com. This site allows for you to see all of your accounts in one place and also conveniently categorizes all of your expenses. Here’s how it works. When you sign-up with mint, you can add as many accounts to your profile as you would like; this includes your bank accounts, credit cards, loans, investment accounts, and any property you own. It then downloads all of the transactions from your accounts and categorizes them. You can see how much you spend on clothing, gas, restaurants, entertainment, and many more. You can also see how much your savings and investments have grown. Combining all of your accounts onto one site will allow you to always have a current snapshot of your finances, and you’ll also have a pretty good idea of your net worth too.

Once you evaluate your spending habits, you can personalize your budget for each category of expenses. If you only want to spend $100 per month on eating out, mint will add-up all your transactions from restaurants from your various accounts and notify you when you have reached your budget. If you have a smart phone, you can also download the mint.com application and take your budget with you wherever you go.

During this tough economy, keeping a close eye on your spending habits could make a huge impact on your ability to save for retirement. Let’s look at an example of a common category where you could overspend without realizing it. If you stop by Starbucks on your way to work and buy a specialty beverage and a muffin three times a week, you will spend approximately $20 per week. By the end of the year, you will have spent $1,040 on Starbucks. Bills.com puts an interesting perspective on this topic. They not only ask you to consider how much you could save by not indulging in Starbucks for the year, but also ask you to consider how much that $1,040 would be worth if you not only saved it, but invested it. With their handy tool, My Savings Machine, you can calculate the value of your Starbucks savings over the years. If you invested what you spent on Starbucks during the year and assume an interest rate of 4%, over a period of 10 years, the value would grow to $12,790. This small change of perspective could make a large impact on your retirement savings. The tool also allows you to change the rate of return, period of investment, and amount invested so that you can personalize how much you could save.

So next time you find yourself asking, “Where did all my money go?” start thinking about your current spending habits and consider how they are affecting your financial future. You may find that eliminating those unnecessary purchases could allow you to plan that beach vacation you been dying to take or maybe you can finally afford those new golf clubs you’ve been eyeing.

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