How much money do you spend?
Whether that’s on a daily, weekly, or monthly basis – do you actually know how much you’re spending?
If you find yourself scratching your head, it may be time for you to track your expenses.
Why?
Tracking your expenses is a crucial part of managing your finances. It helps you to know much money you actually spend), but it can also reveal what your spending patterns are.
Sounds good, right?
You might be wondering, “How exactly do I track my expenses?”
Not sure where to start? Don’t worry! Below, I’ll outline 3 simple steps you can take so you can get started on tracking your monthly expenses.
3 Easy Steps to Track Your Expenses
There are many ways you can track your expenses. Tracking your expenses will depend on your preferences, needs, and lifestyle. Some people like a hands-on approach wherein they log each transaction as it happens. Others prefer creating a spreadsheet that captures their monthly expenses. If you prefer, you can use budgeting apps to make it easier for you to track where your money goes!
For those who are a new to this concept though, below are 3 simple steps that can help you get started:
How much money do you spend?
Whether that’s on a daily, weekly, or monthly basis – do you actually know how much you’re spending? If you find yourself scratching your head, it may be time for you to track your expenses.
Why?
Tracking your expenses is a crucial part of managing your finances. It helps you to know much money you actually spend), but it can also reveal what your spending patterns are.
Sounds good, right?
You might be wondering, “How exactly do I track my expenses?”
Not sure where to start? Don’t worry!
Below, I’ll outline 3 simple steps you can take so you can get started on tracking your monthly expenses.
3 Easy Steps to Track Your Expenses
There are many ways you can track your expenses. Tracking your expenses will depend on your preferences, needs, and lifestyle. Some people like a hands-on approach wherein they log each transaction as it happens. Others prefer creating a spreadsheet that captures their monthly expenses. If you prefer, you can use budgeting apps to make it easier for you to track where your money goes! For those who are a new to this concept though, below are 3 simple steps that can help you get started:STEP 1 : Establish a Budget (And Stick to It!)
The first step to tracking your expenses is to establish a budget. A budget is your financial plan for a specific period – be that your weekly, monthly, or yearly budget. Budgeting is the process of creating a plan for how you’ll spend your money. If, for example, you want to establish a monthly budget, here are 3 basic steps you should take: Write down your monthly income. Note: If you’re single, this can be your personal income. If you have a partner, this can be your combined monthly income. List down your monthly expenses. Start with writing your essential expenses: food, shelter (rent or mortgage, plus utilities), transportation, clothing, and savings. Next, write down your other expenses: eating out, entertainment, streaming services, etc. Ensure that your income minus your expenses = zero. This is a zero-based budget. With a zero-based budget, you have to ensure that your expenses match your income during the month. This way you know where every dollar is going and that they have a “job” to do. Reminder: A budget doesn’t control you – YOU control it. Think of it as a guide you set up to ensure you know where your money is going.STEP 2 : Record Your Expenses
Record every purchase that you make. It’s important that you record EVERYTHING – and do it every day. If you don’t keep up with your expenses, you’ll never know exactly how much you’re actually spending.
The best approach? Track as you spend. Carry around a pen and notebook wherever you go. If that’s too much of a hassle, you can use an expense tracker app like Mint or Goodbudget.
Recording your expenses at the moment will help you to think twice about each purchase that you make.
STEP 3 : Review Your Needs (And Create a Plan)
As you track your expenses, be ready to make certain adjustments. First, consider whether an expense is something you need or want. This may help you find areas where you can cut back and find ways to save. If you discover that you’re spending more than you’re earning, it’s time for you to reduce your spending.
Bonus Tip: If you’re married, make sure that both of you are tracking your expenses. This is great for communication and accountability.
Why Tracking Your Expenses Is Important
When you track and watch your expenses, you know exactly where your money goes.
Tracking your expenses can also give you important insight into your spending habits. If you’re not sure where your money is going, you won’t be able to pinpoint negative spending behaviors. If you’re determined to correct problems related to your finances, you might have to make drastic life changes or decisions.
No one is perfect and you might slip up a time or two throughout your journey. If you do, don’t beat yourself up over it! You might make a few bad financial decisions along the way, but don’t focus on the bad. Make sure to keep track of your positive financial progress, too, and celebrate your wins!
Tracking Your Expenses : Can You Ever Stop?
You should make expense tracking a lifetime habit. Once you feel like you’re making enough progress, it may not be necessary to track every single expense. You’ll still want to do regular financial check-ins to make sure that you’re still on the right track.
Sharita
