Every machine on the inter web has a unique identifier.
Just as you would address a letter to send in the mail, computers use the unique identifier to send data to specific computers on the inter web.
So if I send transactions out and people can see my IP, they know who I am, and can track my spending?
Please call it internet. That's its name.
The nodes your wallet is connected to, gain knowledge of your payment from your machine first. So they can at least guess that it originated from your machine('s IP address). Of course your ISP knows which customer is assigned which IP address, so if you have access to that info or can gather other data that connects you and your IP address, your payment can be connected to your identity.
I suggest you visit wikipedia and check the Bitcoin article to see how cryptocurrencies work