Welcome to the third installment of The Blueprint to Financial Success Series. Last time we talked about the importance of tracking your income. This week we’ll talk about how to track your expenses.
One of the best ways you can gain control of your finances is learning how to manage your money better. The only way you will learn how to manage your money better is by knowing where your money is going.
To be successful, you cannot keep track of everything in your head. Before I started taking budgeting seriously, I used to try and keep track of what I spent in my head. It became overwhelming and before long I just gave up. I would make quick runs to the grocery store, stop at Starbucks, etc and found it impossible to keep track of every penny in my head. I had to crack the whip and take control of my spending. In order for you to be successful, you have to decide to crack the whip too! If you are serious you have got to commit to making a permanent change by tracking every penny you spend. It doesn’t matter if it’s a $.50 piece of candy, it must be tracked.
The steps below will show you how to do this.
SELECT YOUR CATEGORIES
This task should be easy. All you need to do is jot down every category in your budget. Write down everything you can think of. Although it’s not necessary, I group like categories together. It makes it much easier for me to track my expenses that way. You can create basic categories but the more specific the better it will be for your finances.
The list below is a great starting point if you’ve never tracked your expenses before. This is what I use to track my expenses.
- Home (rent/mortgage, repairs, home improvement, maintenance)
- Car (repairs, gas, payment, insurance, registration)
- Food (groceries, snacks, eating out)
- Giving (tithing and offering, Salvation Army, etc.)
- Utilities (the internet, phone, electric, water, Netflix, etc.)
- Personal Care (clothing, hair, toiletries, massages, etc)
- Gifts Christmas(birthdays, anniversaries, Christmas, special occasions)
- Other (date night, concerts, hobbies, and miscellaneous household items,)
HOW ARE YOU GOING TO TRACK YOUR EXPENSES?
There are so many ways to track your expenses; I can even list them all. I’m a paper girl but have used Mint. I love Mint because you can link your bank accounts and it does all the tracking for you. I’ve found that tracking manually helps me control my spending better. No matter your method, make sure you can stick to it.
To make it easier for you, I’ve created this expense tracker for you to start. Print it out and start tracking. Make sure you keep it somewhere that is easily accessible. I wait until the end of the week but you can track daily if keeps you more accountable.
I like to mark my receipts with a little red mark to confirm that I’ve entered it on my expense tracker. Because I use my sales tax on my taxes, I keep all of my receipts in a file to reference during tax season. I also keep them because I may return them if I find I don’t need something within 30 days. This is a bonus because if I need to return something, it adds money back to my account.
HOW TO USE AN EXPENSE TRACKER Monthly Expesnse Tracker
- Start with the receipts you already have – I keep all my receipts in my wallet and clean it out at the end of each day. I make my husband keep all his receipts and collect those as well and store them in a basket on my shelf in the dining room. At the end of each week, I transfer the amounts to my expense tracker. Write the payee and the method of payment on your tracker. (ex. Publix, cash, check, debit, or credit card.
- Receipts that fall into more than one category, divide any receipts that double for more than category. Toiletries and prescriptions are a great example.
If you have any purchases that don’t have receipts such as online bill payments, clothing purchases, or checks, write those immediately so you won’t forget to track them.
As you develop the habit of tracking your expenses, you will probably discover some alarming spending habits. If you are anything like me, you may discover that you were spending hundreds of dollars at the grocery store and Ross. Hopefully, it will be enough to smack you in the face to get take control and make some serious changes.
Having an Expense Tracker will make you accountable and give you a clear snapshot of your current financial situation. Seeing where you stand financially will hopefully force you to develop better money habits that will change your financial future.
While it’s great to track your spending, the only real way you will ever take control of your money is by creating a budget. Budgeting will help you develop a better approach of where you should spend your money. Stay tune for my next post on budgeting.
How to Track Your Expenses was seen first on Hobbies and Cents.