How can you get an accurate picture of your financial health if you can’t even keep track of your personal expenses? It’s difficult to understand where your money goes when you don’t keep tabs on your spending habits, but it’s not impossible.
With these tips and tools, you can start tracking your personal expenses and discover what costs are driving up your debt or leading to an overall increase in your spending.
Your personal finances can be a scary thing to think about sometimes, especially if you’re the type of person who has no idea where your money goes each month. What if you knew where all of your money was going? Wouldn’t that help you better manage your spending, saving, and debt? The tips in this article will help you do just that – know exactly where your money goes each month!
Why is Important to Track Expenses?
Many people live paycheck to paycheck, but they don’t realize how much they spend each month on personal expenses. Tracking your expenses gives you a clear idea of where your money is going and what areas need improvement.
- Tracing the expenditures allows you to take control of your finances.
- You’ll be able to identify areas where you can save money and avoid unnecessary spending.
- You may also be able to see how much you need to earn each month to cover your fixed expenses.
- With an expense tracker, you will have a more accurate picture of your financial situation and budgeting tips that work for you. What ways have worked for others?
- Setting up categories that match your needs will make it easier to keep track of which category goes with which expense. For example: Food = Groceries or Dining Out; Clothing = Clothing or Dry Cleaning; Utilities = Gas or Electric Bill; etcetera.
Also check: Spendthrift? Tips to reduce this habit
5 Tips for Keeping Track of Your Monthly Expenses (and see where you can cut back)
#1. Forming a routine
If you’re new to budgeting, it can be hard to figure out what bills you should pay and when. But once you’ve been tracking your personal expenses for a month or two, it will become obvious which bills come out at which time of the month.
#2. Keep a Receipts Folder
The most obvious way to track your expenses is just to keep a folder or scrapbook of all your receipts. It’s as simple as that. It doesn’t take any special software, but it does take discipline and consistency—keep all your receipts in one place and sort them once a week.
#3. Create Categories
Once you’ve made a few categories, it’s time to start creating sub-categories. For example, if you have an Investing category and a Real Estate Investing category within that—now make more specific categories (such as how much you invest in stocks vs. how much you invest in real estate) underneath each of those two larger headings.
The beauty of tracking your expenses is that the better you are at tracking them, the better off you will be. You will find out where your money is going and what areas can be cut back on or eliminated altogether. So take the time to create these sub-categories; they will save you in the long run!
#4. Use Technology To Your Advantage
Technology has made it easier than ever to make smart budgeting decisions. For example, with apps like expense tracker, you can keep tabs on your spending as well as create a budget for future expenses (think holiday shopping). Technology also makes it possible to save money by tracking and monitoring prices; apps like Goggle Alerts will notify you when a product you’re interested in goes on sale at one of your favorite stores.
Therapy can help you process the emotional and psychological components tied to money. Counseling can also help reduce the stress of financial problems.
#5. Keep it Simple and Designate Times
When tracking your monthly expenses, keep it simple. Unless you are a power user who can make Excel do all sorts of complex number-crunching on your behalf, stick to a basic spreadsheet or chart that allows you to quickly add new categories and update old ones. And don’t forget about designating times for recording expenses. If there are certain times that it seems like you’re spending a lot more money than usual, try tracking those purchases for one month and see if patterns emerge.
#6. Set Goals
Start by setting a fixed amount of money you’re going to save each month. For example, if you’re saving up for a vacation, make that your goal. Set a separate goal for personal spending and divide your monthly income by two to see how much you can realistically save every month. Budgeting tips include listing all of your expenses in an excel spreadsheet with the date they were incurred, the type of expense (e.g., groceries), the cost, and the category they fall under (e.g., housing). Be sure to include recurring bills like car insurance or Netflix in this list as well!
Tracking personal expenses can be done in multiple ways. Not all methods are suitable for all people or situations, but if you’re interested in staying on top of your finances, some options could work well for you. After spending hours sorting through credit card statements and looking up bank statements, creating a spreadsheet is a convenient way to track expenses without relying on memory.
By adding categories such as grocery shopping, gas purchases, restaurant outings, entertainment spending, and others it is easy to identify where money has been spent so far. The key to tracking personal expenses lies in knowing what categories should be included or excluded based on one's lifestyle.