How to Track Expenses – 6 Strategies for Monthly Tracking

The first step in tracking your expenses is to get into the habit of reviewing your account statements every month. A manual review of your account statements, whether paper or electronic, allows you to spot any fraudulent transactions and look at how much you spent.

When gathering your statements, consider your checking account, savings account, credit card account, and any other financial accounts you have.

In some cases, you may have multiple accounts of the same type. For example, you may have a dedicated savings account for big financial goals, like a down payment fund or vacation fund.

It’s also common to have two or more credit cards to help build credit. But every additional account also means another place to look when reviewing your statements.

The next step in tracking your expenses is to organize them into categories. You can do this using spreadsheets, a pen and paper, or budgeting apps (more on those below).

Common categories include:

• rent or mortgage payments
• utilities
• groceries
• transportation
• healthcare

You will also include other categories in which you spend frequently. Your expense categories should be unique, just like your priorities. Some people also include an “everything else” category for less common purchases.

These categories can become a monthly expense list, and your monthly expense list becomes an outline for your monthly budget.

A budget doesn’t restrict how you spend your money – it gives you a plan for where your money goes. If the word budget gives you an icky feeling, think of it as a “spending plan” instead.

Now, it’s time to lay out your spending plan (or budget) in a way that’s easy for you to follow and understand. Some people like to use many specific categories, like fast food and dine-in restaurants. Others may lump together all food costs, including groceries and restaurants.

When building your budget, consider these common budgeting methods to get you started:

• Traditional budget: With traditional budgeting, you break your spending down into categories that align with your most common spending areas. You then set a spending limit for each category to ensure you don’t overspend. Any leftover funds go to savings. Your monthly costs should add up to less than your monthly income from your paychecks or other income sources.
• Zero-based budget: With a zero-based budget, every dollar you earn gets a “job.” That can include debt payoff, retirement investments, emergency savings, and traditional budgeting categories. At the end of the month, every penny should be accounted for.
• 50-30-20 budget: With the 50/30/20 budget, your income is divided into three simple categories, so you don’t need to track every purchase with the same level of detail as a traditional budget. Most people following this style of budget break down their spending into 50% of income toward needs (e.g., rent, groceries, utilities), 30% toward wants (e.g., restaurants, entertainment), and 20% toward savings.

Choose a budget plan you’ll stick with. No budgeting plan is helpful if you only do it once or never implement it.

Think about how you interact with your money and what budgeting habits can get you excited to track growing your savings, paying down debt, and taking control of your spending.

If using a pen and paper or an old-school spreadsheet doesn’t sound like fun, budgeting apps could be a better solution.

Budgeting or expense-tracking apps automatically download and categorize your transactions into budget categories. You just have to check in to see your monthly spending and see if you have room to make additional purchases.

With most budgeting apps, you can create and edit categories and set a spending limit for each category, and the app takes care of the rest. You may even be able to create rules to automatically categorize certain transactions to train your budgeting app to be even more automated and helpful.

Check out our list of the best budgeting apps to learn more.

If these spending plans don’t feel like the right fit, you’re not out of luck. While most financial experts suggest following a budget, you can track your expenses using alternative methods.

For example, you can use the Chime app to check your account balance and recent purchases at any time. If you use your Chime Checking Account for all purchases and monthly expenses, all your transactions will be listed in one place. Opening the app before you buy something can help you decide if you can afford the cost.

You can also list fixed and variable expenses so you know what costs to expect each month. This list will give you more information about how much is left for costs that go up and down.

Find a way to track where your money goes and avoid overdrafts or shortfalls for expenses you really need.

Now that you’re the master of your spending, you can take more control over your spending and try to lower your expenses. Every dollar you avoid spending is another dollar you can put into savings, debt payoff, or long-term investments.

Look closely at how much you allocate to each budget category on average and find if you can lower your spending, even just a little bit. Cutting $50 per month from your grocery budget, $30 from entertainment, and $20 from other categories gives you an extra $100 per month for long-term financial goals. That adds up to $1,200 per year!

The more you can cut expenses, the faster your wealth will grow. Some savvy savers turn it into a game or money-saving challenge to work as hard as they can to cut expenses so they can get out of debt and build their savings as quickly as possible.

Instead of letting your money hold you back from doing what you want, you can use a budget to give yourself permission to spend on what you value most.

If you’re worried about what other people may think about your new budgeting habits, push those fears aside. Learn how to become empowered with loud budgeting.