Kim Shuford often asks rather thought-provoking questions here at the Personal Finance Corner, as well as offering great advice and insight. This question on my post about financial security is no exception:
[I]f you are speaking to someone on beginning a budget, what amount of time do you think is best for them to keep track of their spending?
This is a great question, key to the process of making a budget. In order to get a realistic view of how much money you actually spend, it is important to keep track of your expenses. All of them. Even that $2.50 bagel you bought for breakfast the other day, or the 75 cents you spent on a candy bar.
All of these little expenses tend to add up. You might be surprised to find out exactly how much money you spend on these tiny purchases. The average is about $40 – $50 a month, but some spend well over $100 a month on small purchases that they don’t even think about.
I agree with Kim that the minimum should be one month. Carefully track your spending for at least one month. If you can, tracking your finances for two months would be better. That way you can get a better idea of what you are spending you money on. For expenses like insurance premiums that are paid quarterly, biannually or once a year, average out the amount so that you can include it in your monthly expenses.