How To Track Expenses

I’ve talked about how to start budgeting here before, but how do you know whether you’re sticking to that budget? First and foremost, you need to make it a habit of coming back to your budget. But second, you need to start tracking your expenses.

What Is Expense Tracking?

Expense tracking is a super simple way of looking at where you spent your money over a certain amount of time.

If you’re spending more in one area than you think you are, it can throw your whole budget off, and you will find yourself trying to make up for that in other ways. Some people do this by reducing other categories to make sure their budget stays zero-based, while others tend to overspend.

Expense tracking is how to make sure you have reasonable budgeting categories set up for your spending habits, and that you are sticking to the amount you have budgeted without overbudgeting.

How To Start Expense Tracking

There are a few different ways you can track your expenses. Some people prefer to use programs like Excel, Google Sheets, while others like using Mint or YNAB*.

I have tried other methods out there and have learned that while digital systems are great, I am old fashioned and personally prefer to use good old paper, pen, and highlighter. We use a Google Calendar for tracking when our bills are due, but I still prefer to use a Bill Pay Checklist that I can fill in throughout the year. I have a Google Sheet with our estimated paycheck budget breakdown, but I still come back to pen and paper for our actual paycheck budgeting.

You can grab your copy of the budget workbook I use here!

When I set up our paycheck budget, I make sure that there are expense trackers with that paycheck budget breakdown. Nothing ruins the budgeting mood like having to go search for another paper.

Now when it’s time to use our expense tracker, I do things a little differently. The first is that I set up two expense trackers: one for cash expenses and the other for debit expenses. Not all of our budgeting categories are paid for in cash, and I don’t want to double-count expenses later on.

When it’s time to mark expenses, I color code them so that I can see which categories have the most spending. I love using these Stabilo highlighters* for this job. In the end, it’s always our grocery budget that has more expenses than any other category we currently have.

How to not use your Expense Tracker

But most importantly, I do not use our expense tracker as a checkbook register. In other words, I do not use it to see what is left in our bank account; I have a Google Sheets spreadsheet for that.

Expense tracking is not used to see what is left from our zero-based budgeted paycheck; I have a separate piece of paper for that.

Instead, I use it to keep running tallies of our categories for the paycheck. This way I can easily see how we’re progressing towards, and when we’re getting close to, our budgeted amount.

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When using my Expense Tracker, I do things a little differently.⁣ .⁣ I separate debit expenses from cash expenses, that way I’m not double counting cash expenses.⁣ .⁣ I color code expenses that way I can easily see which category has the most spending.⁣ .⁣ But most importantly, I do not use it as a checkbook register. In other words, I don’t use it to see what is left in our account. I use it to keep running tallies of our categories throughout the month. This way I can easily see how we’re progressing, and when we’re getting close to our budgeted amount.⁣ .⁣ How do you use your expense tracker?⁣ .

A post shared by @ makingcentsmatter on Feb 8, 2020 at 10:47am PST

This method also makes it super simple to see if we need to reevaluate our budget categories and amounts for the next paycheck.

To help you keep track of your expenses, I created a free Expense Tracker for you in my resource library. To download one for yourself, click here to sign up.

If you’d prefer to get my 80-page budgeting workbook, with an expense tracker, you can click here to find out more.