Where Does My Money Go?

Have you ever had $20 at the beginning of the week and by Wednesday it was gone? Even worse, you can't remember how you spent it?

That's a spending leak. Like a dripping faucet wastes water, spending leaks can waste hard-earned money. To plug spending leaks, you first have to know where the money is going.

One way to track leaks is by keeping a spending diary. A small spiral notebook makes it easy. Keep this notebook in your purse or pocket and write down everything you buy over the course of a day and how much it costs. Include everything, even small purchases such as a cup of coffee or a newspaper. Ask everyone in your family to do the same thing.

Track your spending for a few weeks. Even better, track it for three months. Then, take a look at where you’re spending money—you’ll probably find your spending leaks.

Once you’ve determined where your money's going, you can start plugging those leaks.

By reducing—or better yet, eliminating— your spending leaks, you'll find you have more money to apply to bills, add to your savings, and, ultimately, reach your goals.

Here are some common spending leaks.

• soft drinks
• fast-food meals
• snack foods
• coffee
• magazines and books
• movies
• video or DVD rentals
• CDs and tapes
• lottery tickets
• gifts
• cable TV
• phone options, such as call waiting
• Internet service

Fill in the Plugging Spending Leaks form to see how much money you could be saving every year.