How do you keep track of your spending? Do you reconcile your checking account or do you depend on the bank being accurate? Do you know how much you spend on a given day?
There's a lot to track, the grocery budget, bill budget, vehicle budget, house/apartment budget, entertainment budget, savings goals and more.
I use an excel spreadsheet to stay on top of my finances and spending, logging every expenditure, be it a cash, debit card or credit transaction. On average, I know how much I spend every day, on what and how often. My buying habits are documented and I don't ask myself, "Where did that $20 go?"
For example I try to keep my grocery budget between $200 - $300 per month. For most of my home cooked meals, I can fix something that tastes great but costs just $2 or $3 to prepare and doing that allows me to splurge sometimes, maybe spending $10 for a 'Chef Mike' cooked meal once in awhile. For a single guy that likes to play in the kitchen or at the grill, I eat pretty well.
Another example in how tracking your spending can help you budget and more importantly plan for future expenses and savings goals, is a vehicle budget on a spread sheet. Currently, my truck costs me an average of $104 a month to maintain. I don't have a truck payment, so that $104 a month is oil changes, preventive maintenance, the occasional repair, etc.... That figure does not include gas or insurance. But yes, all other costs, to include any accessories I might purchase - yep, even the air freshener dangling from the rear view mirror - is logged on a spreadsheet. When the spending on my truck gets up to the $200 a month to maintain mark, it's time to start shopping for a new one.
Here's without question the best reason to track your spending, whether you do it with an excel spreadsheet, QuickBooks, an accordion file or a good old fashioned journal - Tracking your spending on a daily basis can help you avoid living paycheck to paycheck. I've been there and done that and it sucks.
The best way to understand your spending habits, is to document them and doing so only takes maybe five minutes a day. Decision making with the bold facts right there in front of you, becomes much easier.