Tracking expenses, I don’t believe that anyone would say that is fun. In fact, that task is probably the furthest from fun, which is why so many people avoid it. I haven’t exactly found a way to make the tedious task any more fun but I do have some tips to make it less tedious. Even the most carefree of individuals can find a method of tracking their expenses that will work for them.
It’s easy to track some of your expenses. Utilities, loans, anything that is reoccurring an similar in amount is fairly easy to track. It’s those other expenses, those “discretionary” expenses that can be so tough to get your hands around. How much do you spend in gas? Too much, I know. But do you know the average amount per week or month? What about groceries, entertainment, clothing, lunches, etc? These areas are the most important to track because they are the easiest to change and tell us the most about our individual habits.
The only way to know where you spend your money is to track it. Knowledge is power! Tracking your expenses will provide you with valuable information. It can help you reprioritize your spending, help you determine how a major life change will impact your lifestyle, and put you back in control of your spending.
Here are some methods for tracking your expenses:
Use Pen & Paper (or Excel). You could track your expenses manually, saving receipts and logging them. Speaking from experience that’s a lot of work and takes a bit of time. Though, can be great for those that use mostly cash.
Use Financial Software. You can use financial software like Microsoft Money or Quickbooks but those can require quite a bit of manual labor in data entry.
Use One Account. Some people use one credit card or debit card for all or nearly all of their expenses. Some credit cards and financial institutions offer expense summaries and will categorize your spending for you even providing you with reports. This works great if you stick to one account.
Use Tracking Software/ Apps. My little tracking secret is Mint.com. It is a free, secure, online tool you can sign up for to help you track your expenses. This works great in cases where you have multiple checking accounts and credit cards. It will aggregate everything for you and then categorize it. It’s smart too! I find that only occasionally do I need to help if categorize an expense. It knows Wegmans is grocery/food. There are tons of other expense tracking apps out there besides Mint.com. A Google search will yield lots of results, helping you find one that works best for you.
I’ve done everything from paper and pen to Mint.com. Some methods have worked better for me than others, often based on my lifestyle at the time and what was going on in my personal finances. The important thing is to find a method that works for you. The key is to keep it as simple as possible so you will stick with it!