How to Track Your Expenses so You Can Win with Money!
Have you been wondering where all your money has gone by the end of each month? I definitely used to! When my husband and I first got married, we had a written budget, but we never tracked our expenses. After a while we realized our spending was getting out of control and we needed to do something fast. This was when my husband took our paper budget and put it in an Excel spreadsheet, and we started looking at it Every. Single. Day. Yes. Every day. It was so eye opening to me to see what I was actually spending our money on because I definitely didn’t realize I had been spending that much!
If you want to win with money, I believe you absolutely have to track your expenses. No matter if you are in 6 figure debt, or debt free with a $1 million net worth, in order to have a successful plan for your money you have to know where it goes.
Today I want to talk about some reasons why we want to track expenses and a few ways on how to do this efficiently.
Reasons to Track Your Expenses Monthly
While this is not an exhaustive list of reasons to track your expenses, these are 3 important ones.
1. To know where your money is going
How do you know how much money you are spending on groceries if you never look at your expenses? Or maybe you only check your expenses at the end of each month. What would you do if you were over your grocery budget by $200 and didn’t have the money to pay the credit card off?
Tracking expenses is not an exercise to make you feel bad about spending money. It is the total opposite. Tracking helps you know where your money is going and if you are on track with your budget or off track. Sometimes we fall off the wagon and that’s okay! We still do this even though we have been budgeting for a long time now! No one is perfect and we are not going to beat ourselves up for overspending! If this happens, regroup and get back on track, but don’t give up all together! You’ve got this!
2. Tracking helps you stick to your budget
This point and the first point kind of go hand in hand. If you are tracking expenses daily, then you know if you are over or under budget. This is why I like the idea of daily tracking, so you always have an idea of where you are on your budget for the month. You could also do weekly tracking, but daily tracking will take less time!
3. Helps you feel like you have control over your money
I know before we started tracking our expenses, I was living my life in panic mode because I knew I was overspending but didn’t know how much money I had actually spent.
Now that we track our expenses daily, I no longer have anxiety about being over budget all of the time. I know how much money is allotted to each budget category and since we track our spending daily, I know how much we have left. It is so empowering to know where your money is going!
How to Track Your Expenses
Let’s briefly discuss the best ways to track your expenses so you can get started!
1. Create a budget
In order to track your expenses successfully, you will need a budget to know if you are staying within your spending limits or not. If you do not currently have a budget, there are several different budgeting methods out there, but I always recommend the Zero-Based Budget.
The Zero-Based Budget simply means your take home pay less your expenses will equal $0. This is the method we have always used and what has worked best for us.
2. Create a spreadsheet, use pen and paper, or a budgeting app in order to keep up and track your budget
There are so many options to input a budget and track your spending these days. We personally use an Excel spreadsheet and that works for us. I would suggest if you are just starting out to use pen and paper or a spreadsheet so you can really see where your money is going. The way you keep up with your budget is really just personal preference.
3. Monitor your spending daily to keep track of where you are spending
This is key. Monitor you spending daily. This will seem like a lot at first, but I promise it is easier to spend 5 minutes per day looking at your bank and credit card statements and inputting into a spreadsheet than waiting until the end of each week or each month to review your spending.
Looking at your spending daily also helps keep a visual of how much you have remaining in your budget categories. There have been several times that I thought I was way under in one of my budget categories, but I was actually over budget! I 100% believe this is what keeps us on track with our budget each month!
If you have never tracked your daily expenses before, it might seem daunting at first. However, this is absolutely necessary in order to win with your money. As time goes on, you will find that it gets easier to track your expenses and be successful with your budget. I can’t wait to see you win with your money! Do you have any tips for tracking monthly expenses? Drop a comment below. I would love to read them!