Personal Finance / Unit 2: Budgeting
2.4 Tracking Spending
Notes
You can only manage spending you can see. Tracking shows where money really goes.
- Methods: a notebook, a spreadsheet, a budgeting app, or reviewing bank statements.
- Sort purchases into categories and compare actual spending with the plan.
- Small repeated purchases add up. Example: $4 a day, 5 days a week, is $4 \times 5 \times 4 = 80$, so $80 in a four-week month.
- Review regularly and adjust the plan when it does not match real life.
- Percent of income = category $\div$ income. Rent of $600 on $2,400 income is $\displaystyle \frac{600}{2400} = 25\%$.
Practice
What is the main purpose of tracking spending?
Tracking gives the information needed to make better choices.
Eli buys a $3 drink every school day, 5 days a week. About how much does he spend in 4 weeks?
$3 \times 5 \times 4 = 60$.
Rent is $750 and monthly net income is $2,500. What percent of income goes to rent?
$\displaystyle \frac{750}{2500} = 0.30 = 30\%$.
Ready for more? Take the Unit 2 test.