A common recommendation of financial planners is to track household spending for a month or two to identify "leaks" and "find" money to save or reduce debt. Because we spend money daily, most people do not have an accurate record of where our money goes over time. An average person spends money about 3 to 5 times a day, or about 100 times a month. This includes small purchases, such as a pack of gum, as well as larger expenses, such as rent.

One way to know how you spend money is to keep an account of every transaction. You can keep a small notebook with you to jot down any spending or request a free Spending Tracker by sending a self-addressed, stamped envelope to Rutgers Cooperative Extension, 3 High Street, First Floor, Newton, NJ, 07860.

Keeping track of the small items you buy will provide an accurate expense record. Many small cash purchases, such as lottery tickets, parking meter money, coffee break items, gum, and cigarettes, can add up to considerable monthly amounts. Categorizing expenses will help you see the different areas in which you spend money. You can also see what percent of your money goes for various expenses items (e.g., food, clothing, gasoline).

Below is a list of common expense categories and the types of expenses that should be included in each when tracking spending:

·    Food - meals prepared at home, school lunches, office lunches, snacks and meals eaten away from home.
·    Housing - mortgage payments, real estate property taxes, homeowner's insurance, rent, renter's insurance, maintenance and repairs, cleaning supplies, appliances, furniture, and accessories.
·    Utilities - electricity, fuel oil, natural gas, telephone, cell phone, trash hauling, water, and cable television.
·    Transportation - vehicle loan or lease payments, automobile insurance, auto registration, driver's license renewal fees, gasoline, oil, auto maintenance, parking, and public transportation fees.
·    Insurance - life insurance, health insurance, dental insurance, and disability insurance.
·    Clothing - clothing for school, work, special occasions, shoes, accessories, and dry cleaning.
·    Medical - all medical fees including doctors, dentists, hospital bills, medicines and drugs.
·    Entertainment/Vacations - hobby supplies, video or DVD rentals, pet care, sports equipment, film and processing, club memberships, movies and plays, and vacation expenses.
·    Savings and Investments - savings, pensions, 401(k) plan, and individual retirement (IRA) contributions, mutual funds, and other investments.
·    Personal/Miscellaneous - tuition, books, supplies, newspaper and magazine subscriptions, personal care expenses (e.g., haircuts and hair coloring).
·    Credit Payments - credit cards and other credit payments (e.g., student loans, personal loans).
·    Gifts and Contributions - charitable contributions, gifts for various occasions, wrapping paper and cards.
·    Taxes - federal and state income taxes, Social Security (FICA) taxes, and tax preparation fees.
·    Other - child care, union and professional dues, child support and alimony, gambling losses, and other expenditures not classified in other categories.