How do you feel about your finances? Do you have a budget? Do you know what you spend your money on, or does it just sort of seem to come and go and every now and then you check your account to make sure you aren’t overdrawing? Maybe you keep tabs on how MUCH is IN the account, but not on where it’s going. Does budgeting overwhelm you? Then you have GOT to read this post.
It’s about the single BEST thing you can do to get a grip on your finances.
Feel like your drowning, confused, or just don’t know where to start? THIS is where. When your finances are overwhelming you, this is your first step. And you can start RIGHT NOW.
The secret is monthly tracking.
That means keeping track of each transaction and each time you spend money and then categorizing it so that you know how much money you are spending and what you are spending it on. And no, it’s not hard to do. You just sit down preferably once a week, check out your bank account online, and organize your transactions. If you pay with cash or a mix, you can just keep a little note book or save your receipts.
But for we get into the how, let me tell you WHY this is SO important:
- Tracking your expenses keeps you in touch with your finances. You don’t have to worry so much about if you have enough money in your account if you are checking in with it frequently enough.
- When you start to track your expenses it makes it super easy to recognize your most costly spending habits. When you have to stare down a page at the end of the month that shows that you spent over $200 eating out, it’s a lot easier to know where to make your most effective budget cuts.
- If you are watching where your money goes, you naturally start making better money choices. You start to think, “If I buy this, I’m going to have to face it again later… do I need this?”
- It helps you protect your self from theft. If you are familiar with every charge to your bank account, then if someone hacks you or steals your card, it’s going to be a lot easier to recognize every charge they make, as well as notice the faulty charges sooner!
So what’s the best way to do this? You need to pick a format first, either pen and paper, an online website, or an app on your phone, or maybe a custom spreadsheet on your computer to track these expenses in. Then you need to follow these two rules:
- Track EVERYTHING. This is not a budget. Be honest so you know exactly what you are spending. Our main goal is just to KNOW where the money is going.
- Update everything atleast once a week. It’s best to make a habit out of it where you sit down and check in with everything and sort, update, and track your spending once a week. The same day preferably so that it becomes a habit.
Picking a Format – HOW to do the Tracking
Now that you know that you need to do this, HOW? Let’s walk through the methods.
There are several awesome websites out there that connect directly to your bank account, letting you sort your transactions as they come in. You can easily log-in using your computer. Some of them even let you keep track of other goals you have for saving, help when you decide to create a budget, and even track your investment and retirement accounts.
- Fairly customizable.
- Clean and easy, pretty user friendly. (I would much rather do lots of editing or sorting on my computer than my phone.)
- Transactions automatically uploaded for easy sorting (links to bank account).
- Can be used to track other things besides expenses (retirement & investments), very helpful for budgetting and budget creation.
- May have an accompanying app to give you the best of both digital methods.
- Very accessible, you can check it and update from someone else’s computer if needed.
- Requires you to allow a website to have your bank info. Not necessarily a problem, as the reliable sites have good security, but may still freak some people out.
- May be easy to put off, since you need to be at your computer to use.
Great for: Those want the most hands-off approach, with the flexibility of editing from your computer.
- Mint.com – The biggest and most well known finance tracker. Very simple to use, lots of extra features, highly recommended.
- PersonalCapital.com – Like Mint but with features to track retirement and investment accounts.
- YNAB.com – You Need a Budget. This looks like a very intuitive option that walks you through the tracking AND budgeting process, however it isn’t free. (Unless you’re a college student! Then you get one year free to try it out!) It’s $50/year and I’ve heard some great things if you need that extra push to invest yourself, but again, there a lot of free options out there.
- EveryDollar.com – Dave Ramsey’s budgeting/money tracking website. (The free version is cool, but only lets you manual input your data. This means it does NOT connect to your bank account. Unless you want to pay for it. Still thought it should be thrown in as an option.)
There are SOOO many personal finance apps out there. The nice thing about apps is that some of them will sync with a website account so you get the mobility and convenience of your phone but can also have the easy of use of a big computer screen and mobility of your mouse. (I would much rather do lots of editing or sorting on my computer than my phone.)
- Sooooo convenient. It’s right there in your pocket for you to check any time!
- Should help you check in with your finances more often
- Allows you to sort transactions more frequently than other methods, preventing them from building up.
- Some apps have an accompanying website to give you the best of both digital methods.
- May not be as flexible or easy to set up/customize as other methods
- Requires you to allow an app to have your bank info. Again, may or may not be a concern for you.
Great for: Those who are most likely to put off tracking their finances, or who just love being able to handle it on their phones! You could even set up a reminder to go in and check it.
Options: (I have never used these so I cannot testify for them, I compiled them from multiple “best of” lists.)
- This “7 Best Money Management Apps” article on DailyWorth.com
3. Pen & Paper
Ahhhh, the classic “Pen & Paper” Method. I may be a little weird, but this is my personal favorite. When me and my husband got married, this is how I got used to tracking our finances as I had neither internet nor a smartphone. It’s so easy and simple to grab a sheet of paper and organize your spending. Plus I’m just one of those people who remembers and processes information best with a pen or pencil in my hand. Seriously guys, I take notes on EVERYTHING with a pen and paper, even though I hardly ever come back and look them. It’s mostly because the act of writing it out helps my brain process and remember it. I also like the flexibility of just being able to draw up a new category or change my formatting with my pen instead of trying to edit categories that might be pre-written by someone else, so I’m usually a blank page person. At least for the most part… but after a couple years of experience I have pretty much figured out how I like my tracking pages organized. So I have developed a basic, super adaptable Free Monthly Tracker Worksheet Printable.
- Super customizable
- Most familiar and easy for journalers (bullet journal page anyone?) and those who enjoy the physical aspect of writing
- Don’t have to sort through tons of apps and websites to decide which is best for you, just make some categories and pull up your bank history and write!
- Tons of printables to choose from, or just go wild with a blank page
- Your bank information is yours! You don’t have to worry about a website or app getting hacked.
- Lots of writing (may not be a con for you…)
- No digital back up, unless you scan it into your computer or take a pic of your sheets each month
Great for: Anyone who processes things better with a pencil in hand, those who don’t want to share their bank info, and those who get overwhelmed at their options of apps and websites and would rather not have to choose between them. You get the most control over your formatting and what you keep track of this way too.
- Grab a paper, write some categories, and figure out what you spend your money on!
- Download my free worksheet and customize it yourself!
Any of these may be your perfect match!
If you prefer to do it online, on your computer, on your phone, etc. then just pic an app or website, make an account and GET GOING! That’s awesome!
Free Monthly Expense-Tracking Worksheet Instructions
- Write the month and year in the little bar in the lower right corner.
- To begin, figure out your steady, recurring monthly bills, and write them all out in the monthly category. If you know the bill amount is always the same (i.e. our mortgage or gym membership), you can pre-fill it in. If it’s a varying amount, like an electric or gas bill, then just fill it in when you get it. Whenever the money actually comes out of my account, I put the date on the left of the bill so I know that it has been paid. You could also write (Due: #/#) next to the bill name so you remember WHEN you need to pay it if your bills are not automatic withdrawls.
- When I enter other transactions I put 1) the date it came out of my bank account, 2) where I spent the money, and 3) the amount I spent.
- If you spent it in cash or a check, write that next to it, just so you can keep better track of that.
- Gasoline: I like to note WHICH car we filled up each time, that way we know how much each of us spends on gas per month.
- Eating Out: If you spend a lot in this category, it can be helpful to further divide it into subcategories (see “Income” and how it’s divided into a column for me and for my husband? like that.) I divide mine into “Alone, Together, and Other” meaning, did one of us just buy food out by ourselves, was the two of us, like on a date, or were we maybe buying a pizza for a group or paying for someone else meal. This can help us know what specifically we need to cut back on, maybe I need to pack snacks for work so I don’t stop at the drive-thru so much, or maybe we need to make a date night budget, etc.
- Miscellaneous: This is anything else you spend money on. You may want to add more detailed notes here than just where you spent the money, but that’s up to you.
- Income: Pretty self explanatory, but I like to write a “T” next a paycheck once I have tithed on it, so I never worry about wether or not I got all our checks covered.
- End of the Month: add up each category with a calculator, and write the total amount in the title bar, like in this example with the Groceries category.
Now you easily know exactly where your money is going, and you can keep track of your income and bills soooo much easier!
Tips & Tricks (for any method)
- Cash: Keep track of cash by either entering it immediately into your budget if you use an app, OR by keeping a little notebook with you in your purse where you write down your transactions, OR by entering it into a note on your phone, OR by saving your receipts in a special baggy or something in your purse to handle later.
- Checks: Same as cash, enter into your budget as soon as possible. Make sure you pull out your check book each time you actually sit down to update your expenses tracker.
- Depending on your method, you may not ever need to just sit down and categorize and track all your spending. BUT, when you are starting out, set yourself one day each week to just check up on it, so it doesn’t get overwhelming.
- Also, you should have a monthly budget meeting with your spouse to go over your findings. This is definitely something you guys need to be on the same page with, and you may each have different ideas of how to better handle your finances after actually being able to see where the money goes. Obviously, if you and your spouse have separate bank accounts you obviously need to be tracking both accounts.
- Don’t forget! Track EVERYTHING. All expenses and spending.
- Lastly, if you are not yet married but engaged, I still recommend you and your future spouse sit down and go over this stuff together. The honesty and openness with your finances is a fantastic pre-marital foundation to lay. Plus, it will help you budget for when you do share expenses and have to plan your life together.
Why you have to do this:
REMEMBER, start small! Just start tracking your expenses SOMEHOW, RIGHT NOW. That’s it.
You don’t need to conquer all your bad spending habits.
You don’t need to create a detailed budget.
You don’t need to start a retirement account or start investing.
Not yet anyways, haha. This is an important first step, so make sure you do it! All those other things are awesome and necessary and will come with time, but if your finances are overwhelming you, just know, all you have to do is take one step at a time. This is your first, awesome step.
What do you think? Sound manageable? Got questions? Got a success story of what happened when YOU started tracking your spending, or what the big first step was for you? Leave me a comment and let me know!