Every month, we get our salary and tell ourselves we will need to save up. Yet at the end of every month, we realise that we have not saved as much as we would like, if we even managed to save at all. There is always that dinner with a friend you have not seen for 3 months, the trip to the doctor, the PC that spoilt, the shoe that you wanted, the annual holiday, the birthday gift to your spouse. It never ends.

Many of us would like to think we are rational consumers. We spend lesser than we earn, and therefore we should be able to save some money. Some of us even think that we only spend on the necessary items. Many of us do not take an actual look at how much we spend, leaving a rough idea in our head about our spending habits. Yet when we actually sit down to it, we realise that more often than not, we spend way more than we would like.

Tracking expenses, something very simple which requires just 1 minute of everyday effort. But it is also something that most of us are not doing. There are many apps or software online, but my favourite is always the good old Excel. Simple and straightforward. All you need to do is to create a few simple entries:

Date Food Transport Social Activities Medical Mortgage Miscellaneous Remarks
1-Aug 4.3 2.30 0 0 20 Shoes
2-Aug 5.1 3.20 20 0 100

The above is just an example. Of course, you are free to add, reduce or amend the categories according to your own needs. The most important thing to do is to actually be truthful to yourself. You do not answer to me, or to the judge of the courts. Be truthful, take a hard look at yourself and note down your expenses accordingly. Even if the amount is small, note it down diligently. Do not tell yourself, I will just skip the small amounts that I spent today. Spending $2.30 on transport is no big deal. Note it down to the cents, and at the end of the month you will see where you are at. Persistently, conscientiously, spend 1 minute everyday recording down your expenses.

At the end of one month you will have a very clear picture of where you spend your money on. Are the expenses necessary? Can I cut down on them? If I am to save more, which aspect of my spending should I tighten? After you have taken a hard look at yourself, it is time to set some saving goals.

With a clear and realistic goal, combined with diligent tracking of your expenses, you are able to review easily and regularly where you stand in terms of reaching your objective. This, will be the first of the many steps on your way to financial freedom. Definitely not the most critical of all steps, but everything accumulates bit by bit.

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