You work hard for your money and deserve to get the most out of those coins. Spending that hard-earned cash is all about making choices, and those choices add up. If you aren’t careful, those choices can be a slippery slope into debt (or worse… like bankruptcy). As soon as you decide to pay off debt, it’s time to start tracking your spending so you can better manage your money. Keeping track of expenses is critical to financial success. It is the best way to discover where your money is going. Learning how to track your expenses could be the key difference between having a poor credit score and a good credit score.
With a good tracking system in place, you can better manage your money and gain valuable insights about your spending habits. This will help you save more money and reach your financial goals quicker. In this post, I share three easy ways to track your expenses.
1. Create a budget.
First, create and follow a personal budget. It can be difficult to budget your monthly salary when you are living paycheck to paycheck and barely making ends mean. Many people shy away from budgeting. Budgeting can feel like another constraint – and who likes to have limits? But let’s be real, we need limits if we are going to win at this money game and finally reach financial freedom.
A budget allocates your money and gives your money a specific task. Your budget should consider how much you need to spend, how much you need to save, and how much you should put toward debt if applicable. Then, you can fit in some play money for that cocktail at Happy Hour. Budgeting reminds you that you have essentials and you have options. Figure out what your essentials are first. Going out to eat with friends should be less of a priority than paying your debt off sooner. When you aren’t prepared to tell your money where to go, you can easily lose control of your finances. Control your money, don’t let your money control you. Budgeting may place limits on you now, but eventually you’ll be able to release those limitations and have fun.
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2. Use a spending tracker.
If this is your first time actually managing your money, then it can be a little tedious and anxiety-provoking initially. Spending trackers can help. A spending tracking will compare your income and expenses. Tracking your expenditures lets you know exactly where you’re allocating your funds. You will be able to see if you need to slow down on your spending. Every tracking application doesn’t work for everyone. You may have to try different applications to see which one works best for you. Here are some budget-fan favorites:
Pen and Paper
Did you ever see your parents, or someone in a film, sit at the table and write down their budget and grocery list? Good, old-fashioned pen and paper is definitely an option for tracking money. I absolutely love watching YouTube videos of budgeters who track spending on paper.
Expense tracker spreadsheet
Take it up a notch by using a spreadsheet as your tracking system. You can create your own expense tracker worksheets in Excel or Google Sheets.
Mint is a very popular budgeting software system. You can sign up to digitally track your budget. You’ll give Mint permission to connect all of your accounts which then enables you to track your spending in one place. It also give you an easy look at your full financial situation by including cash, credit, loans, and investments. You can also categorize your spending and set reminders to pay your bills.
Personal Capital is an investment advisory firm. It uses financial advisors to help clients with investment decisions. It also provides free budget tracking software. Like Mint, Personal Capital connects your financial accounts. Personal Capital also calculates your net worth which lets you see the big picture.
3. Set weekly check-ins.
Now that you have created a budget and decided on a tracking system, you will check-in on your progress and success. These financial check-ins show you exactly where you are financially. You can decide if you need to cut back, adjust a category, or do something different the next month.
Remember, budgeting is here to make your life better not less fun. For those of you on a debt free journey, tracking your expenses is one of the key factors in reaching financial freedom. Overtime, you will feel more in control and be able to enjoy the positive benefits of sticking to your budgeting plan.
There are various ways to track expenses and manage money. Tell us which methods you use in the comment section below.
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