Does your money seem to disappear in the blink of an eye? If you want to get better at handling your finances, learning to track your spending is incredibly important. It can give you an accurate idea of where your money is going and help you to spend it on things you need rather than want.
Money worries can be stressful, but when you track it, it can really help you to start saving, allowing you to be prepared for the future. Maybe you want to buy a house? Or you’ve got a new baby on the way? All of these life milestones are costly, so you must be financially prepared.
In this guide, we aim to show you easy and simple ways of how to track what you spend. From creating a budget plan to using the latest spending apps to stop unnecessary cash flow. If you’d like to learn how to change your spending habits, then make sure you read on to find out more.
Do you know where your money goes?
Do you find yourself staring at your bank statement, scratching your head? Where does your money wander off to and why is it dwindling so fast? Don’t worry though, it’s perfectly possible to take control of your spending, the key is to find out exactly where your money goes.
Keep all of your bank statements safe and together so that you can look back and see exactly how much you’re spending. It’s easy to spend little bits here and there, and at the time it may not seem like much. But those little bits can add up at a scarily quick rate and before you know it, you’re out of money! Next, we’ll look at some easy steps you can take to manage and change your spending habits.
Track your spending and expenses:
Steps to Track Your Expenses
1. Check Your Statements
The first step is to take a look at your current and previous bank statements. This will help you to see exactly how much you spend and how often. Get a sense of what your monthly spending habits look like and then you can start creating a plan to reduce them. When you go shopping, try to only take cash, this way you won’t be tempted to overspend.
2. Prevent Spending Leaks
Once you start actively tracking your spending, you’ll start to realize exactly where your money is disappearing to. If you tend to grab that expensive Starbucks drink every morning, or you eat out at lunchtime every day, these kinds of transactions are known as spending leaks.
It may not seem like much, but these small amounts add up quickly throughout the month. Once you have recognized these leaks, you can start to save money by curbing these unnecessary expenses. If you eat out at every lunchtime, you’re probably spending at least $10-$15 a time, which means $200-$300 a month!
That’s money that could go towards your future retirement or go into your children’s college fund. Small changes such as this can make a big difference, and your bank account will thank you for it.
3. Create A Budget Plan
For you to take control of your expenses, creating a budget plan is a key step you can take. So what is a budget plan? Put simply, it’s your monthly plan that will tell you your income and the expenses that will go out. Your budget plan will be a financial lifesaver.
To start with, make note of your monthly income. Then write down your monthly expenses, starting with the most important things such as food, mortgage or rent, and utilities. Don’t forget costs such as gas prices and car insurance if you have one.
Once you’ve covered those important expenses, write down your other costs such as dining out, TV streaming services i.e Netflix, gym memberships, savings, gift buying, etc. The aim is to get your monthly income minus your expenses to zero. In other words, you’re putting every single dollar you earn to good use.
If you’re going over your budget, you may need to sacrifice a few of those less important costs, to get that zero mark. This isn’t to say that you should let your bank account reach zero every month, that’s very risky. Try to leave around $50-$100 dollars a month, to be on the safe side.
4. Use A Budget App
If you need a bit of extra help managing your money, a budgeting app is probably the best option for you. There are many apps available and most of them are meant for general budgeting for your personal expenses. There are both free apps and ones that you pay for.
The paid ones usually offer extra features, whereas free ones tend to be more basic. Whichever one you choose, they’ll only work if you’re willing to take the time to log your outgoings consistently every day and stick to your planned budget.
5. Spend What You Need Not Want
Do you often find yourself impulse buying or purchasing stuff you know all too well you’re never going to use? Impulse buying non-essential items can be a devastating drain on your bank account. To put an end to this, remove all temptation by not window shopping or going to the shopping mall just because. If you need to stretch your legs, opt for a budget-friendly alternative like the park or a beach if you’re near to one.
If you do need to take a trip to the mall, make a list of things you absolutely need and stick to it. Don’t fall for the sales assistant patter, remember their job is to sell you as much as possible, regardless if you’ll use it or not. The key thing to keep in mind is; don’t spend money that you don’t have.
Why Should You Track Your Expenses?
Being out of control of your spending habits is a situation that no one wants to be in. Tracking your expenses and setting spending limits is essential for preventing unnecessary and wasteful spending. Being aware of how much you spend holds you responsible for your future plans, which ultimately could be the difference between being financially comfortable and broke.
It will also help you to see your financial progress if you have any long or short term goals. The more progress you see yourself making, the more motivated you’ll be to keep tracking and saving. Another reason to constantly track your money is security.
If you hadn’t checked your finances for weeks or even months and someone stole your account details, how would you know? They could be spending your money and you wouldn’t even realize it. By checking your money every day, you’ll be able to catch fraudulent transactions straight away if you do unfortunately fall victim to credit card theft.
Why it’s important to create a budget
We’ve already established that a budget plan is an important step to keep track of your expenses. But why is it important? For lots of reasons actually, it keeps your outgoings reasonable and makes sure you’re able to save for the future. If you wander aimlessly through life throwing money away on every materialistic, unnecessary thing, how will you be able to buy your dream car, or become a homeowner?
Your budget plan means you’ll have to set out your goals, save up, and get closer to your dreams. Ok, so that designer jacket or the 4k Ultra HD TV you’ve been eyeing up won’t fit into the said budget plan, but a purchase such as a new house or the holiday of a lifetime will be much more satisfying than materialistic objects.
How do I track my spending?
Starting to track how much money you spend may be intimidating, you may want to bury your head in the sand, but that never helped anyone! Checking your bank statements is the best way of pinpointing exactly where your money is going. You may discover small costs that have been hiding, subscriptions that you no longer use, or even mistaken or fraudulent transactions.
Start by making a note of everything you spend every day. Once you become conscious of your outgoings, you may be less inclined to spend recklessly. If you find that you’re really struggling with your money, ask your partner or a trusted friend or family member to help you. Sit down and discuss it together. Sometimes it’s easier to stick to a plan when you have the support of another person.
If you need more ideas on how to save money, check out this useful Best Budget article on how to save on your cell phone costs https://bestbudget.com/how-to-save-money-on-cell-phone-costs/
What is the best app for tracking expenses?
There are numerous apps available these days, so it can understandably be super difficult knowing which one to choose. Not all apps are created equal though and they all offer different features. If you’re struggling immensely to track your money and all other methods of budgeting have failed, then the YNAB app is the ideal choice for you.
You Need A Budget was built specifically to focus on creating a budget and to track your finances. It will force you to give every dollar you earn, a job, whether that’s for saving, paying off bills, or investments.
If you’re the kind of person who hates filling in things, then Wally is the perfect app for you. It allows you to take a picture of your receipts so there’s no risk of typing errors from having to manually fill it in.
What is the best free app for tracking expenses?
You don’t need to pay for expense trackers, so many of them are free and still offer fantastic features and functionality. The most popular free app on the market is Mint. This is an incredibly practical app for creating your budget, tracking your money, and being smart about how you spend.
You can link your bank accounts and your bills so everything is kept together for ultimate convenience. If you’re a bit forgetful, this app will be a lifesaver! It tells you when your bills are due and how much you can afford to pay based on your current available funds. It also sends you warnings if you’re getting close to your budgeting limits.
Is spending tracker app free?
Yes, Spending Tracker is completely free! It’s an incredibly easy and user-friendly app that lets you effectively track and take control of your money. The simple and easy to understand layout helps you manage your money and you can choose whether you track daily, weekly, monthly, or even annually.