How to Track Your Expenses Like a Jenius
Does it feel like your money flies away? Tracking your expenses could help.
Do you really know where your money goes each month? Do you have a sense of how much you spend in different expense categories, like food, entertainment, housing, and transportation?
If you’re not sure, you’re not alone! Many people face challenges when tracking their expenses, leading to overspending, saving challenges, or growing debt. Expense tracking helps you understand where your money is going and is the first step toward better financial management.
Expense tracking is an essential part of creating a sustainable budget and understanding your overall financial well-being.
There are multiple ways to track your expenses, ranging from old-school pen and paper to digital apps.
Once you have a handle on where your money is going, you can make adjustments to support your financial goals.
What Is Expense Tracking?
Much like the name implies, expense tracking is the process of keeping track of all the money you make and spend to understand how much money you have coming in and where your money goes. This helps you make informed decisions about your spending habits.
There are a few reasons to track your expenses. First, it helps you identify areas where you may be overspending and could cut back.
It also gives you a better understanding of your overall financial picture. By tracking and understanding how much you’re spending on different categories, you can identify areas that need more or less money in your budget.
Finally, tracking could help you identify trends in your spending habits, which could help you make more confident and informed decisions about your financial goals.
Steps for Tracking Expenses
Let’s explore some steps you can take to track your money, establish a healthy financial foundation and build a plan to achieve your goals.
1. Record Your Income
Take a moment at the start of the process to understand how much money you have coming in each month. You’ll want to include money earned from all sources, including full or part-time employment, freelancing or passive income streams like investments.
Once you have your income recorded, then it’s time to dive into expenses.
2. Track Your Spending
There are a few different ways to track spending.
Even with all of the technology at our fingertips, a lot of people still use old-school list making for money management. In our survey of over 400 millennials, we learned that 50% still use physical checklists to track their spending while 29% use spreadsheets.
Mobile apps and online tracking have become more popular in recent years. Our survey found that 29% of people use their bank’s built-in tracking and 26% using some other type of financial app.1
Let’s compare these methods.
Uses a pen and paper
Low-tech, hands-on approach
Requires manual updates
Pro: Customizable to your lifestyle and budget
Con: You have to remember to update it (and where you put the notebook!)
Uses a computer or tablet spreadsheet
Lots of customizable templates available
Can be time consuming to set up and requires manual updates
Pro: Can utilize templates and customize the tracker for your needs
Con: Spreadsheets can be complex to set up if you have specific tracking needs
Uses a bank’s app to track spending
May include features to set budgets or create goals, personalized insights and alerts
May be limited to accounts at that bank
Pro: May give real-time updates that could offer personalized insights into your spending habits
Con: May not integrate with accounts outside that institution
Uses an app to track spending
Often integrates with your accounts and financial apps if you provide login information
May have to pay a subscription fee
Pro: Integration with other apps for real-time updates
Con: Sometimes has features behind a paywall
3. Watch for Hidden Expenses
Sometimes it’s hard to track certain spending habits, like cash purchases, in-app spending, or fees on bank accounts or credit cards.
Bank and credit card fees are often rolled into your overall statement. Make a habit of checking your statements regularly to keep track of any fees you’re being charged and note them in your expense tracking.
Do you have automatic reload set up in some apps, like your favorite coffee shop? Doing so makes it easier to cover your visits, but it may give an inaccurate picture of how much you’re spending.
For example, you may have $3.50 left in your app account, so you choose to reload it to cover your $5 latte. If your auto-reload is set at $20, your bank account will show a $20 debit for the reloading, instead of $5 for the actual coffee. Consider noting the actual cost whenever you use a feature like this to make your tracking more accurate.
If you tend to buy items with cash, make sure to track these as well, as these charges sometimes add up quickly. It may also be harder to figure out where your money is going if these types of purchases aren’t included in your expense tracking.
4. Review Spending Regularly
Create a cadence for checking in on your spending that works for you. A lot of people choose to review their spending weekly or monthly. By reviewing spending on a regular basis, you can adjust planned purchases throughout the month to stay on track.
Categorize Your Expenses
Categorizing your spending into needs, wants, savings, and debt repayment could help you understand where your money is going and identify places for change. Let’s look at what defines each of these categories.
Essential things you need to live.
• Healthcare/Life Insurance
Non-essential expenses you could live without,
but they often bring joy.
• Home décor
• Eating out/Entertainment
Money set aside for specific purposes.
• Emergency fund
• Preparing for a purchase
• Student loans
• Credit cards
• Car loan
Once you’ve figured out where you’re spending your money, you have the knowledge necessary to start building a budget.
The time you put into tracking your expenses may help you gain an understanding of your overall financial situation and make more intentional spending choices. It also provides insight into where your money is going, which can help you identify areas for change.