Penny Foolish or Pound Wise?

The tiny details of your spending habits hold many secrets about your financial faux pas and could even be indicative of your chances for financial success. It may seem obsessive to track every penny of your spending, but doing so - even for a short period of time - can clue you in on some major spending problems that you can easily fix.

For example, let's say that every afternoon at work, you get a hankerin' for a soft drink. You go to the vending machine and spend $0.75 on some soda. About twice a week, when you wander over to the machines to get your soda, you also decide that you need a crunchy (or sugary) snack to go with it, so you spend another $0.50 on each of those two days.

Once a week, usually Monday before work, you stop at a gas station to get gas for your car. When you go in to pay, you also pick up some juice and a granola bar, and drop about $2.50 for the treat.

When you go grocery shopping each Wednesday, you have a pretty set budget, but you notice that you always end up overspending by $3.25 - which isn't a big deal, right?

Finally, about twice a month -- right before a really big meeting or late work night -- you decide to treat yourself to a latte at your local coffee shop. That sets you back about $4 each time.

If you add up the daily, weekly and monthly indulgences above -- each of them small charges when considered individually - you'll find that collectively they add up and you are spending $53.49 each month in these extra, tiny charges that seem like nothing when you make them. Combine this with all the other “little” transactions you make each day, and you could have a significant amount of extra money to put towards your debt or savings each month. In this example alone, the additional $53.00 put in a savings account monthly and earning 2% interest would grow to $643 at the end of one year. 

Every financial decision you make - from big-ticket purchases to vending machine soft drinks - matters. Tracking each penny you spend helps you see what kind of decisions you're making, how they may be hurting your ability to achieve financial goals, and take charge of your spending.

This article will also appear on Destinations Credit Union's On Your Way site.  Visit the site for more money management tips and tricks, primarily geared toward young adults.