The Digerati Life is a personal finance site that offers tips and resources on saving money, stock investing and credit management. Check out the site’s coverage of topics that range from high yield savings accounts to the wise use of balance transfer credit cards.

Go on, pick a figure. Whatever you choose I bet it is considerably lower than the figure you actually do spend. It’s human nature to downsize when we are thinking about our “outgo”. And I know from experience that when you see your expenses written down in black and white, it can come as quite a shock.

If you are flush with money and happy with your life financially, you don’t need to worry too much about what you are spending. But if you constantly struggle with cash and you wonder where it all goes, finding out the answer to that question is a very good idea.

I’ve been through this same experience myself and I know how liberating it can be. Yes it can be a bit frightening as well, but it does ultimately give you power too. You see, most people go out to try and increase their income when they find they cannot make ends meet. But the easiest way you can turn your financial numbers to black (from red) and have more cash over at the end of the month to invest with your online broker, is to save what you already have. It stands to reason, but itÕs amazing how many people don’t take this route first.

To figure out your spending, take a look at your income and outgo. This would entail taking a hard look at all the figures and debits you already know about, such as the mortgage, household bills and so on. Anything that gets paid regularly needs to go down on a list with the correct amounts written in.

Write Your Expenses Down!

When I did this exercise a long while back, I bought a small cheap notebook to figure out the real answer to my question of why I never seemed to have any cash left over. This was my daily notebook… the one where I would write down every single penny I spent. All my expenses went in here, including the few dimes I spent on a daily paper. The secret to getting this right and to getting the answers you want is in the details.

I did this for about a week initially, and then progressed to doing it for a whole month. And boy did I get some interesting answers.

Once you’ve done this, you will see exactly where your money goes and more importantly, you will see how you can make some significant savings as well. For example, you’ll be able to see where your weak points are. I found out just how quickly things can add up: I had daily newspapers and magazine subscriptions that I didn’t even have time to read, so eventually, I halted those subscriptions. You may not think that a tiny savings like this makes a difference, but saving just a little bit each day can lead you to some surprising totals at the end of the month. You may be pleasantly surprised at just how much you can save by taking small steps.

For fans of budgeting, this type of manual (primitive?) expense tracking is the first step. If you’re all ready to evolve your tracking methods into something more committed and involved, then you may be interested in actually using money management software or an easy to use free budgeting application.

So start out with some form of basic expense tracking if you are struggling with your budget. I guarantee that you’ll actually start to enjoy finding out where your money goes; and the experience is actually an enlightening one too. It puts you back in control of your cash – every cent of it – and you’ll be amazed at the difference it makes to your bank balance at the end of the month.