The First Step to Frugal Living Is to Know How Much You Spend

Posted on January 10, 2008. Filed under: Frugal Living | Tags: , , , , |

Thursday is about Frugal Living

Every month I go through the process of reviewing all of our bills, and decide when and how we are going to pay them. When I look at the money that is coming in, and the money we owe, it seems like we should have more than enough for all of our other needs. But at the end of the month, we always have less than we should. I am good at keeping track of our bills, and could not figure out where the money was going. I have goals for eliminating our debt and building our savings, and want to make better use of our money to meet those goals (or get to them faster!)

One thing we do to help eliminate debt is avoid taking on more debt. We use cash for everything, and avoid using our credit cards. Using debit cards for our purchases, allows us to use money from an account that is designated for all of our purchases. It also gives us an electronic record of all of the purchases we make. When I reviewed last month’s finances, I looked at all of our grocery purchases and saw that we spent $1,000 in groceries. ONE THOUSAND DOLLARS!

This is the first time I looked at how much we spend in groceries. We do all of the right things to save on food bills-rarely eating out, watching for sales, planning meals, cooking at home, avoiding processed foods-so I was surprised at how much we spent. Now granted, it was December and we did a lot of holiday cooking. Plus, we are a family of five–including two teenagers. However, that is still a lot of money to spend, and it is a lot of money that was not budgeted, but was still spent. No wonder I had less money at the end of the month than I thought I should.

While we have adopted a bunch of frugal practices into our routine, I realized that the best first step towards frugal living and good money management is to know exactly where all of your money is being spent. I have an Excel spreadsheet that I use to keep track of all of our bills, when they are due, and when I have paid them. I pay bills twice per month and use the spreadsheet to mark bills that should be paid on the first of the month in yellow, and bills to be paid on the 15th in orange so nothing is late. I also use it to keep track of the balances on all debt, and the interest rates on all of our debt to remind myself which debt I should tackle first. It may sound complicated, but it works for me.

Here is a screenshot of the spreadsheet I use (although the names and numbers have been changed to protect the not so innocent). One thing you will notice is that I am now keeping track of groceries, gasoline, and lunch money which I think are the major expenses we were not monitoring.


There are places where you can get more polished and professional ways to track your expenses. One webpage that I like is which has money management tools plus great discussion boards. Another is, but they have less of a social network and information sharing.

Whether you use a homegrown system, or one of these slicker systems, there is no way to get a handle on your expenses, and make a plan for your money without knowing how you currently use your money. We are keeping track of everything for the next two months. Let’s hope January is not another month with a $1,000 grocery bill!



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  • About

    Musings on how a disorganized woman with a full time job, three kids and a real need to relax is trying to make life simple.

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