Fiscal Fitness '09: Control Your Cash Flow in 5 Minutes

Today's tip is part of our Fiscal Fitness '09 series. Every weekday this month, you'll get help getting fiscally fit as we work toward our goal of saving $2,000 to invest in 3 stocks!

How much do you spend for food each week? What about home maintenance over the course of three months? Coffee? Hair products? You're about to find out.

Online money management tools offer an instant rundown of your cash flow, even if you're the worst record keeper in the world. With Ginsu-like precision, these one-stop shops aggregate your accounts, provide detailed rundowns of your balance sheet, keep tabs on spending and saving, track trends, and even compare your money habits to others with similar financial psychographics. (Yes, there are others out there just like you.) They can even help you account for those "where'd the money go" $60 ATM withdrawals, even if you spent the dough in several places.

As with any fiscal fitness plan, we begin at the beginning -- getting a handle on your current state of financial affairs. No need to block out a few hours on your calendar -- we've got a quick and painless way to tackle this task in a snap.

How to take a fresh snapshot of your spending
Today, your single task is to sign up for Mint.com (a Fool partner), a free Web-based service that will tell you exactly where your money goes. (If you already use Quicken, Microsoft Money, or other online tools such as QuickenOnline.com, Geezeo or Wesabe, then you're already good to go!)

When you first sign up, you're asked to introduce Mint to your bank, credit card and even investment institutions. (Read more about the site's security here.) It then goes out and grabs the previous 90 days of data and takes a stab at shuffling all the transactions into the appropriate categories (e.g. Mortgage/Rent, Groceries, Fast Food, Home Services, Financial Fees). After that, every time you sign on, Mint automatically grabs the information and ports the data into your pre-set tracking categories. (As someone who has publicly copped to pecuniary sloth, trust me -- setting up my money stuff on Mint was no sweat.)

What should your expense breakdown look like? One source is the government's Consumer Price Index, which estimates how much people spend in various categories:

Category

Weight in CPI (Dec. 2007)

Companies Affected by Consumer Behavior

Shelter

32.6%

Toll Brothers (NYSE: TOL  ) , Pulte

Transportation

17.7%

General Motors, Ford Motor (NYSE: F  )

Food

13.8%

General Mills (NYSE: GIS  ) , Kellogg

Medical Care

6.2%

Pfizer (NYSE: PFE  ) , Merck

Apparel

3.7%

American Eagle Outfitters (NYSE: AEO  ) , JC Penney

Source: Bureau of Labor Statistics.

Granted, this is most helpful if you put things on plastic (and if you do, we really, really hope you pay it off in full every month). Even if you don't, the spending and bill-payment rundown will at least give you a general sense of your cash flow.

Identify your biggest cash flow leaks
Now that you've got three months of spending data at your fingertips (and the palpitations have subsided), spend time noodling around on Mint.com and creating a handful of categories that best align with how you tend to spend. Don't go crazy, though: The simpler your tracking system, the more likely you are to stick to it.

Next, identify three categories where you can control the amount you spend. For example, the bulk of my spending fell under the "Home" category, but once Mint filtered out my mortgage payment (which is static), my willy-nilly "Home Improvement" spending -- a category which I can certainly rein in -- starkly stood out. I won't even get into the whole "Food" category until later this month, but suffice it to say, there is plenty of room for improvement there.

So where do you leak money? Head to our special Fiscal Fitness '09 discussion board, where Fools are already actively chatting up a storm about getting their finances in shape. And by all means, chime in if you have any questions or tips of your own about today's Fiscal Fitness tip.

More ways to save...

  • Use the old-fashioned guilt-trip trick. Write down everything you spend -- to the penny. Just knowing you're keeping a record of that $2.53 here and $3.71 there will make you think twice about actually spending it in the first place.
  • Cut back on luxuries. Tough times have made everyone think twice about everything that isn't absolutely necessary. For instance, one online survey found that more than half of those surveyed plan to cut back on buying electronic gadgets this year. That's bad news for Apple (Nasdaq: AAPL  ) and Research In Motion (Nasdaq: RIMM  ) , but it could spell quick savings in your budget -- especially if your monthly spending shows a weakness for pricey gadgets and accessories.
  • Try out other online money trackers. Besides Mint.com, there are other free tracking tools, such as QuickenOnline.com and Wesabe.com. On the Fiscal Fitness '09 discussion board, ThyPeace shared how she tracks her and her husband's finances using mvelopes.com.

Read the latest from Fiscal Fitness '09: 1 Month, 2 Grand, 3 Stocks: We're warming your budget up by cutting back on everyday expenses.

Pfizer is a Motley Fool Income Investor selection and a Motley Fool Inside Value pick. American Eagle Outfitters and Apple are Motley Fool Stock Advisor selections. The Fool owns shares of Pfizer and American Eagle Outfitters. Try any of our Foolish newsletters today, free for 30 days.

Dayana Yochim, lead writer for the Fool's Fiscal Fitness '09 challenge, owns none of the companies mentioned in this article. The Fool has a disclosure policy.


Read/Post Comments (1) | Recommend This Article (29)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 05, 2009, at 7:20 PM, schoenhofer wrote:

    I used to use Quicken but could never get the budgeting to work for me. Then I found Mint.com. I love it as I can see accounts all together and the budgeting is done for me. I am way ahead on fiscal fitness as a result.

    Thanks

Add your comment.

DocumentId: 803994, ~/Articles/ArticleHandler.aspx, 7/26/2014 10:09:11 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

TREND TRACKER: Get Rich When the Web Goes Dark

It's time to say "goodbye" to your Internet! One bleeding-edge technology is about to put the World Wide Web to bed. And if you act right away, it could make you wildly rich. Experts are calling it the single largest business opportunity in the history of capitalism… The Economist is calling it "transformative"... but you'll probably just call it "how I made my millions." Big money is already on the move. Don't be too late to the party – find out the 1 stock to own when the Web goes dark.


Advertisement