Start Tracking Your Monthly Expenses:

Many people struggle financially and don’t ever consider tracking their expenses, so if you are reading this article – you are ahead of the game.  You have a desire to improve… that’s a good start.

But while thinking about your financial picture is a great start, it isn’t enough to actually reign in your expenses. The next move is tracking your spending on a regular basis so you can get an accurate picture of where your money is going and where you’d like it to go instead.

I use budgets and expense tracking tools to track my expenses but here’s a 5 step process how to get started tracking your monthly expenses.

Track your spending

1. Check your account statements

In order to identify your money issues and your money habits, you will need to take an inventory of all of your accounts, including your checking account and all credit cards you have.

Looking at your accounts will help you identify where you’re spending.  This is an important step in the process to gather information.

Income vs. expenses is a basic cash flow statement that is essential for people and businesses.

2. Categorize your expenses

Start grouping your expenses. Some credit cards automatically tag your purchases in categories like department store or automotive. If you are using an online tool like or Personal Capital it is much easier.

The classic example in most personal finance books, reference the “Starbucks effect”.  You could find that your morning Starbucks run is costing you a lot. Or maybe you’ll realize you’re paying for recurring subscription services that you could do without.  This could be Gym, phone, TV, delivery boxes, etc.

When classifying or categorizing it is important to realize whether an expenses is a fixed expense or a variable expense. Fixed expenses are less likely to change from month to month. They include mortgage or rent, utilities, insurance and debt payments. You’ll have more room to adjust variable expenses like food, clothing and travel.

3. Keep consistent

Budgeting apps are the greatest.  Many of these apps are designed for money management, letting you allocate a certain amount of spendable income each month depending on what you’re taking in and what you’re paying out. These types of apps will work if you’re willing to log your purchases, put in the time and stick to your budget.

Stick to it, it’s not as hard as tracking by hand or pen and paper.

These apps have appealing benefits, like its ability to sync transactions directly from your bank account and its allows for real time or regular analysis of your financial situation.

4. Work offline

A spreadsheet is another valuable money-tracking tool. I have a countless amount of calculations, spreadsheets and scenarios about my financial situation.  I typically export my data from tracking tools to a spreadsheet to evaluate on a quarterly basis.

You can also find a variety of free budget templates online, sites like NerdWallet also offer an online budget worksheet.

5. Identify improvements and make decisions

As you track, be ready to make change and adjustments. Be regular and take notes of your analysis and thoughts.  It’s worth your time to keep tabs on your monthly expenses because of what you’ll uncover.

Once you make a decision around changing your expenses, commit to it, and give it time to work.  Nothing is instantaneous.

Important to note, the biggest items in your budget and expenses, like the cost of housing, vehicles and utilities, can make a significant impact on your budget.  A 10-20% downward adjustment in these expenses can have a more significant impact than some of the smaller items.

But everyone is different and look for those small repeating expenses which may be costly.

About the author

Arnold Smith

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