If you’re at the beginning of the process of starting to save money for some large purchase or you recently experienced an income reduction or maybe you just need to get control of your finances and you want to create a budget, then you most likely need to start by tracking your current expenses to see where you spend your money and where you need to make adjustments.
Hi, I’m Khushal Oza, Equity Research Analysts, and I know that many people find expense tracking somewhat tedious and that it requires some diligence to keep up with. But I’m going to show you three ways to track expenses, and depending on your preferences and your lifestyle, you can decide which works best for you and maybe simplify your process a bit.
First: Notebook Method To Track Expenses
Option number one is your classic notebook and pen method. This is a great option for those who function mostly with cash or just don’t like to fiddle with a lot of technology throughout the day. A notebook like this works because it’s small enough to go in your purse or in the armrest or glove compartment of your car, and you’re able to keep it handy wherever you go so you can write down your expenses on the spot.
You can keep a list of expense categories taped to the inside of the cover for quick reference. Plus, it has these pockets where you can temporarily store receipts until you get a moment to enter the transaction details in the notebook or transfer them to your permanent receipt filing system. This could be file folders, envelopes, or digital images saved on your computer or cloud storage account.
This method requires the most diligence since you’ll be manually entering each and every transaction. But when you’re entering the transaction details, you want to make sure that you include at least the date of the transaction, what the transaction was, the type or category of the transaction, and the amount.
I always like to include the date because it lets me know when the bulk of my expenses tend to fall throughout the month. Then, I can see if I need to negotiate the due dates for certain bills so that my expenses are more evenly distributed across the month.
Second: Bank Activity Method To Track Expenses:
Option number two is to download your bank account activity once per month. This option is ideal if all of your income goes directly into your bank account and you function primarily with a debit card.
At the very end of each month, you’re not going to download your statement, which would usually save as a PDF. Instead, you’re exporting your transactions as a comma-delimited or CSV document, which can then be opened in Excel or Google Sheets.
From there, you just enter the categories for each transaction, add a filter for the category column, choose each category one by one to add up how much was spent per category, and then type the totals on the next sheet or on a piece of paper.
This method eliminates the need to write everything down every day and can be done in about one hour just once per month as you prepare to create your budget for the upcoming month. Just make sure you’re still saving your receipts, especially so you can identify what any ATM withdrawals were used for.
Third: Smartphone App Method To Track Expenses:-
Option number three is to track expenses using a smartphone app. This is probably the best option for those who have two or more bank accounts. There are free apps such as Mint or NerdWallet that allow you to sync multiple financial accounts—not just bank accounts but also investment accounts if you have them—so that the only time you have to enter transactions manually is when you receive and spend cash that never went through your bank account.
This could be money that you received in a birthday card or money that you put into a birthday card to give to someone else. The beauty of using an app is that it does all of the math for you. Everything is in one place, whether it be cash, credit, or debit card activity.
You can add in all of your upcoming bills with the due dates and set up bill payment reminders. You get instant snapshots of your overall spending and your account balances, and it’s all in one place on one device that, if you’re like me, you have with you most of the time already anyway.
Just know that whenever you use one of these apps, you do have to spend a little bit of time upfront connecting your accounts and putting in your desired expense categories if the pre-populated ones don’t meet your needs. But once that information is in there, you don’t have to repeat the process again.
Now, if you want the convenience of using an app but don’t like the idea of syncing your bank accounts, then you can use an app like Money Manager and Expenses by Innmobile. With this one, you’ll be entering everything manually, but the app still does the calculations for you. It offers monthly comparison charts, the ability to set up bill payment reminders, and a bonus feature that the other two don’t offer—the ability to upload images of your receipts to go along with the entered transactions.
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If you have any questions about anything that I spoke about in this post, just let me know in the comments.
This is a simple and practical approach to managing your finances! Step-by-step breakdown makes it easy to follow.
Love the clarity of this guide! Tracking expenses has never been easier, and these steps are straightforward.
Great tips! I’m definitely going to start using this method to keep track of my spending.
Such an efficient way to keep your finances in check. The 3-step system really makes it seem doable.
Such an efficient way to keep your finances in check. The 3-step system really makes it seem doable.
Such an efficient way to keep your finances in check. The 3-step system really makes it.
Finally, a no-nonsense way to track expenses! These 3 steps are exactly what I needed to get organized.