How to Track Your Expenses

This page may contain links from my partners. I may receive a small commission if you make a purchase through a link, as an Amazon Associate I earn from qualifying purchases.. Please read the disclaimer and privacy policy for more information.

Tracking your expenses is the easiest way to get to know your spending habits, so you can start prioritizing your money and saving more money.

In this post, I’ll walk you through what tracking your expenses actually looks like. The benefits of tracking your expenses and what to do to get started!

If you want a budget template for google sheets that includes a fantastic spreadsheet for tracking expenses, check out my Ultimate Wealth Planner! I created an ideal tracking expenses spreadsheet that I personally use and highly recommend!

Also, for a FREE expense tracker printable, check out my resource library! Join here (again it’s free!)

spreadsheet for tracking expenses, how to track your expenses

Table of Contents

What does tracking expenses really mean?

It means you will LITERALLY write down (aka track) every. Single. Purchase.

Anytime you spend money you want to have it written down. Everything from online shopping, groceries, venmo payments, rent, everything!

This might seem difficult (and super annoying) to do, but after a while you will make it a habit and not see it as a chore anymore.

I even enjoy it! Yes I might be a weirdo… But, picture this for your next Friday night. You pour yourself a glass of wine, open your spreadsheet for tracking expenses and update for what you spent that week. Can you think of anything that might be more fun? I think not…

Benefits of tracking expenses.

Tracking your expenses can give you great insights about your spending habits. Additionally, tracking your spending serves as a great way to see if you’re on track for your saving goals. It is a fantastic way to hold yourself accountable.

It’s easy to think “oh I don’t spend that much” but physically writing down every single number and adding it up will show you how much you’re really spending and where your priorities are.

You’d be surprised how eye opening this can be.

You will no longer have to wonder where all your money is going because you’ll actually know where. You’ll learn what your guilty pleasures are and where you are overspending.

This isn’t something to feel bad about however! Tracking your spending is a great resource to give you more information about YOURSELF.

Learn your habits and adjust based on your goals.

Once you know what you’re spending on and where you may need some improvement you can set more feasible financial goals. You might think you can’t save any money. But after analyzing what you’re spending on and making some changes I’m sure you can save much more!

When you have to take time out of your day to write down every single purchase, you will start being more intentional and mindful about your purchases.

Intentional purchasing means being thoughtful about where your money is going. Ask yourself If you actually need that product or service. Will it bring you joy? If the answer is yes, make the purchase and write it down. If the answer is no, save the money instead. Think Marie Kondo vibes except before you even purchase an item.

How to track your expenses:

Step 1: Create a budget.

Creating a budget is the first step to tracking your expenses because a budget will help you categorize all of the money you have coming in and going out.

Your budget will point out the difference between necessary spending and luxury spending.

Not all spending is bad and a lot is unavoidable! A budget will help you separate out your expenses so you know what is 100% needed.

Once you have assigned everything to a category, you can give each category a target spending amount. This means the amount of money you would be ok spending on that category every month.

For example, you can allocate $1,000 for rent, $200 for groceries, $70 on utilities, etc.

For a further dive into creating your own budget you can read my post on how to create a budget that is going to work for you. Additionally, get a FREE budget template printable in my resource library!

Step 2: Start TRACKING.

There are several different methods to tracking expenses. To make sure you stick with it, choose a method that works for you and your lifestyle! Just because I love excel and have a spreadsheet for tracking expenses (aka my budget template for google sheets) doesn’t mean that is the best method for you!

There are many templates to track expenses no matter which method you prefer. You don’t need to have fancy software to track expenses.

Pen and Pencil.

A lot of people are into journaling or bullet journals, aka me, I genuinely don’t know how I lived without my bullet journal before. If this is you too, there are many different types of bullet journal spreads created for tracking your expenses. You can read more about different bullet journal finance log spreads from bulletjournal.com.

You can also find a bunch of cute expense tracker printables that let you track your expenses by hand super simply and easily.

Alternatively you could just write everything down in a regular notebook. It doesn’t have to be fancy or complicated!

Best Apps for Expense Tracking

There are SO MANY apps designed to help you track your expenses. I personally don’t use any of them because I’m a bit specific when it comes to my budget templates; but if you would like me to write a post reviewing the best apps for tracking your expenses let me know in the comments!

Some notable options are:

Mint
You Need a Budget (YNAB)
PocketGuard
GoodBudget
Personal Capital
CoPilot

Budget Template for Excel or Google Sheets

As you know, my personal favorite. The internet offers several spreadsheets for tracking expenses or different budget templates for google sheets online. So I’ll save you the trouble of searching the internet! Here is my Ultimate Wealth Planner! Am I being annoying with this yet?

Additionally, you can always create your own spreadsheet that works for you!

Envelope System

The envelope system entails switching to cash in select categories and having a separate envelope for each of these categories. At the beginning of the month, you will place how much money you want to spend for each category into the envelope.

For example, let’s look at eating out. We label one of our envelopes “eating out” and we place $150 dollars in it at the beginning of the month. Now every time we go out to eat we bring the envelope and only pay with that cash amount. Once we run out of cash in the envelope we can no longer go out to eat.

This way you easily know if you’ve hit your limit without actually “tracking” anything. The envelope will be empty.

This can be a bit difficult to do, however, for other categories that require online payments. But the envelope system can be a great way to get started with bigger ticket cash option categories.

If it seems overwhelming to write down everything as you spend it; set a time every week or every two weeks to do it. It will slowly start to become a routine and you may even enjoy it!

Step 3: Compare what you actually spent to your expectations.

How much did you think you’d spend? Did you spend more or less than that?

One of the benefits I mentioned earlier is that you will gain insight on your spending habits. Now that you have a couple weeks or months of data accumulated, look to see where you are spending the most.

There are really only two ways to spend less.

Cut out some luxury spending.

Do you actually need all those things you’re spending on? Can you start cooking at home a bit more instead of eating out?

Note: tracking your spending shouldn’t be about feeling restricted and not being able to do the things you want. It should help you be more intentional about your purchases. Start recognizing what you’re spending on that could be going to something else you’d prefer more. Allocate your spending to the things you WANT to be spending on.

Find slightly cheaper alternatives to your necessities.

Are you shopping for groceries at Whole Foods? Try switching to Sprouts or Trader Joe’s!

Is your rent taking up the majority of your spending? Would it be possible to switch to a cheaper apartment?

Ask yourself these important questions. If the answer is no, you can’t find cheaper alternatives to your necessities then cutting out luxury spending might be the only way to go.

Step 4: Save the additional amount!

Now that you’ve been tracking your expenses and making more intentional purchases you probably have some extra cash!!

The fun part is figuring out what to do with this extra cash.

Some options include:

Throw it all into your emergency fund!
Max out your Roth IRA
Use it to travel!

Final Thoughts

When I first started tracking my expenses I got to see all the useless little things I was spending money on. These purchases didn’t seem like a big deal in the moment, but they definitely add up in the long run.

I also think it is interesting to be able to see how your purchases change throughout different life situations. For example, comparing my spending habits before and during the pandemic has been fascinating. (I learned how much free food I normally get at work….)

If you want to save more money or put your money into more meaningful purchases, tracking your expenses is a great way to start! It is a major step to getting in control of your finances.

Lastly, don’t forget to grab my Ultimate Wealth Planner if you haven’t already! Or join my email list to get access into my resource library! I have expense tracker printables in there for free!

What are you overspending on?

Need help with your budget? Send me an email or leave a comment!