Track Your Spending for 7 Days – Save Big Money

Recently, while reading the book, Smart Couples Finish Rich, the author, David Bach introduced the idea of the Smart Couples’ 7-Day Financial Challenge. Since I found this Challenge of value, I wanted to share it with you all tonight.

Background 

In a previous post (shown at the link below), I described how small purchases that are made repeatedly on a daily basis, can add up to a ever large sum after several years. This phenomena is something that financial planners (David Bach included) have come to call The Latte Factor.

What is the 7-Day Challenge?
Essentially, the 7-Day Challenge is a personal finance exercise that you can go through where you will religiously track each and every purchase you make for a 7 day period.

The idea is that after you have kept track of your purchases for 7 days, you will then have a good idea about certain areas where you are either 1) spending excessively or 2) can identify as the Latte Factor previously discussed.

My Personal Finance Journey 7-Day Challenge
In his book, David pretty much ends his description of the financial challenge there. However, I feel that several minor modifications can be made to make it a more worthwhile experience.

Since corny phrases are very catchy, we will coin the modified exercise the My Personal Finance 7-Day Challenge.

Steps to complete the Challenge
To move through this exercise, just follow the easy steps outlined below:

• For 7 days, record each and every purchase you make in the Google Docs spreadsheet I put together at the link below. Do not change your spending habits just because you are doing this exercise.
• To obtain a copy that you can edit and use to track your own spending, simply save the document as an Excel file on your computer.
• Google Docs – Track Your Spending For 7 Days
• In the spreadsheet above, there are 6 categories to place each purchase under. Please feel free to adapt these categories as you see fit for your specific situation.
• Entertainment
• Housing
• Transportation
• Investing/Donations
• Food
• Miscellaneous
• The spreadsheet will automatically generate 1) the total amount you spent during the period and 2) the pie chart and % breakdown of where you spent your money.
• Once you have your pie chart generated, take an in-depth look your spending. Look for patterns and areas where you may be spending too much. Listed below are some questions to help get you thinking.
• Do you spend 70% of your money on food? How can that be reduced?
• Are you spending too much going out to eat?
• Are your tabs at the bar costing you $500 per week?
• Etc…