Expanded Lesson
5 min read
How to Track Spending
-
-
Copied link to Clipboard!
Do you get to the end of every month with no cash left, struggling to pay the final few bills and frustrated because you can’t seem to stay on budget? Learning how to track spending can help you be more aware of where your money goes throughout the month and can help prevent you from having to scramble until the next paycheck.
Lesson Notes:
- It’s important to know where your money comes from (sources of income) and where it goes (monthly expenses).
- Break down your spending into the categories fixed (needs), variable (wants) and future (savings).
- Use tools like spreadsheets and budgeting apps to help you keep track of your spending and build a budget.
LESSON CONTENTS
Where is Your Money Kept?
Make a list of all your accounts, including your checking, savings, credit cards and so on. Note how much money goes into each account monthly and how much you spend in total. This gives you an overview of your monthly cash flow. Also, note where the money comes from, listing income such as paychecks, child support, investment income, freelance gigs and so on.
Use this budget spreadsheet to help you get started.
Where Does Your Money Go?
Now that you have the big picture, it’s time to take a closer look and really track your expenses. Go through your bank and credit card statements for the last three months and list every single expenditure. Break them out into categories so you can better understand what your fixed and variable expenses are.
Grouping your expenses by category makes it easy to see where your money goes every month. You should have two main types of spending categories: recurring expenses that happen every month and fluctuating expenses that tend to vary. Each category will have smaller subcategories.
Spending Categories: Fixed
Things you need are going to be in the fixed expenses category. They are bills you have to pay every month, or you won’t be able to fulfill basic necessities. This category includes expenses like:
- Housing expenses (mortgage, rent, homeowner’s insurance).
- Utilities (electric, water, gas and sanitation).
- Food (grocery store bill).
- Medical prescriptions.
Other fixed expenses are typically bills you’ve signed a contract for and have to pay every month. Otherwise, you’ll default on them which can damage your credit. These include:
- Telecom (phone/cable/internet/streaming services).
- Insurance premiums (health and/or life).
- Credit card minimum payments.
- Auto/student/personal loans.
- Memberships or subscriptions.
Spending Categories: Variable
Things you want are going to be in the variable category. They make your day-to-day more enjoyable or comfortable, but you could get by without them.
- Retail shopping (clothing, jewelry, electronics, cosmetics, sporting gear).
- Dining out or special meals at home (i.e. steak and lobster)
- Tickets to events.
- Alcohol.
- Travel.
- Home décor.
You don’t necessarily need these things, and you wouldn’t hurt yourself (or your credit) if you stopped buying them, but your quality of life might feel lessened.
Spending Categories: Saving
There’s a third category, which falls somewhere between needs and wants, and which could include fixed or variable expenses. Investing in your future is essential at any age. Set aside a certain amount of money for future expenses. Budgets help you plan out your expenses, but these funds will be here to help you in case things take a turn for the worst. You can adjust the amount based on your monthly income.
- Emergency fund.
- Credit card balances (rather than just paying the minimum).
- Savings/retirement accounts.
- Principal payments on car or home loans.
Overall, 50% of your spending should be in the first category (Fixed), and 20% in the third (Saving). Thirty percent should be your maximum for the second category (Variable), and this is typically where people overspend and where you can cut most of the fat.
Reduce Spending
Look for overlap or unused purchases in your spending first. You might be surprised at how much you can save. Subscriptions are a good place to start. What are any recurring charges on your credit card or debit card statements?
Get rid of entertainment services you rarely use. If you are used to paying for cable TV and internet, consider getting your entertainment online by switching to services like Netflix, Hulu or HBO Max. The same shows are usually available on streaming, or you might find something new. This can help you reduce your monthly cable expense.
Have a gym membership, but don’t use it? Get rid of it. What about games you used to play on Facebook or your phone? Hidden expenses like these may be only a few dollars each, but together, they can add up to a chunk of change every month.
Once you’ve gone through recurring charges for things you don’t need and have gotten rid of them, you can tackle what’s happening to your spending money. Here’s where a budget app comes in handy, as it removes any excuse not to log spending right when it happens.
If you can start logging every time you spend money, even if it’s just five dollars from your pocket, you can drill down to the foundation of your spending habits and find the motivation to manage your finances more responsibly.
Create a Budget
It’s a lot easier to achieve your personal finance and savings goals when you have a budget to help you manage your money. Here are a few tips to get you started.
Carry Cash
At the start of each week, pull the cash you are allowed as spending money and use it instead of your debit card or credit card. This will teach you to be more mindful of when you spend since you can see your cash physically dwindle as you spend it. If you run out, grin and bear it until Monday.
Use Envelopes
If you keep finding yourself coming up short when it’s time to pay bills, try the “envelope system” to help you make sure you don’t spend your housing money on takeout. Label envelopes with fixed expenses (from the first category above), and when you get paid, access cash and add it to each envelope. Only withdraw money from the envelope to pay the bill it’s designated for.
When you track your spending, you can improve your money management skills and break bad spending habits.
Related Resources
View All
Expanded Lesson
6 min read
Managing Your Finances During Inflation
Inflation can have a serious effect on your finances. When prices start to rise, consumers lose their purchasing power, which means your money won’t go as far as it used to. You may not be able to control inflation, but you can change the way you manage your finances during these uncertain times. Learn more about the effects of inflation and the impact it can have on your savings and income.
Quick Lesson
4 min read
What To Do With Your Tax Refund
Getting a check in the mail or automatic deposit from the federal government after you submit your tax return is a great opportunity to whip your finances into shape. Don’t let that money burn a hole in your pocket. Use these tips to make the most of your tax refund.
![Different Styles of Budgeting
There’s more than one way to make a budget. Use this guide to learn about the different ways you can manage your expenses as you work toward your financial goals.
[Graphic of male character sitting on coin]](/globalassets/education-center/1_budget-slider.jpg)
Infographic: Different Styles of Budgeting
There’s more than one way to make a budget. Use this guide to learn about the different ways you can manage your expenses as you work toward your financial goals.
Expanded Lesson
6 min read
Working from Home: What to Do with the Money You Save
Many companies have started letting their employees work remotely. You can attend meetings, take calls and answer emails without going to the office every day. Working from home helps to improve worker retention, work-life balance and can even reduce certain expenses. The average person saves around $4,000 a year by working remotely. So, what are some things you can do to put that extra money to work? Use this guide to make smart money management decisions and get the most of every penny you earn while working from home.
Quick Lesson
4 min read
Comparison Shopping: How to Find the Best Deals
As a consumer, you have choices on where to buy the things and services you need, from cars to home goods and everything in between. If you’re trying to save money, you might try comparing prices from more than one store or vendor. Finding the lowest price can help you save money, leaving you with extra cash to invest and pay down debt or work towards other financial goals. Comparison shopping is easier than ever with online tools and shopping. Use this guide to find the best deals online or in-store.
Quick Lesson
3 min read
Is a Free Checking Account Really Free?
You may be intrigued by all the free checking accounts you see advertised. No one likes to pay fees, especially when accessing your own money. Those fees can eat away at your budget. Therefore, free must be good, right? Yes, but free checking is not always completely free. You just need to know what to look for.
Expanded Lesson
5 min read
Kids Checking Accounts: Things to Consider
If your child is responsible enough to manage their own money, you can set up a checking account that comes with its own debit card. Here’s what you need to know about opening a bank account for your child.
Expanded Lesson
6 min read
Money Tips to Save More and Spend Less in the New Year
Around this time every year, countless people spend time pondering and planning goals and resolutions for the upcoming year. Whether your new year’s resolutions are big or small, improving your personal finances can probably help you reach them. A foundational piece to improving your finances is learning how to save more and spend less. Read this article to learn about some of our Community Education Team’s favorite money tips to try in the new year.
Expanded Lesson
6 min read
New Year’s Financial Resolutions
With the New Year rapidly approaching, many take this time to reexamine and reprioritize every aspect of their life, including their finances. The end of the year is a great time to reflect on everything you’re doing right and how you’d like to improve. Many of us make New Year’s resolutions, vowing to change our behavior for the better. If you start meaningful financial habits, you will be one step closer to achieving financial health. If you’re looking to improve your finances, add these New Year’s financial resolutions to your list.
Expanded Lesson
5 min read
Budgeting Plan: How to Stay on Track and Make Adjustments
Americans are more in debt than ever. The pandemic may be to blame for part of the increase, but studies have also shown that Americans are less financially literate than they used to be. If you’re struggling with debt, or you just want to live within your means, the first step is to create a budget.
Expanded Lesson
10 min read
Introduction to Charitable Giving
Philanthropy and charitable giving, once thought to be reserved for the wealthy and the elite, has become a common theme across much of today’s society. Charitable organizations fill a vital niche in our communities. They serve the public and support initiatives that may not be covered by the public or private sector and help create thriving societies and economies. Charitable giving can be both personally and financially rewarding, which is why it’s important to know what your options are so your gift has the biggest impact.
Expanded Lesson
7 min read
How to Set Financial Goals
If you’re looking to make the most of your money, it’s time to set a financial goal. Everyone has dreams of a better tomorrow, and saving money is usually a big part of making your dreams come true. Setting a goal is like setting a budget. You should work towards saving as much money as you can every week/month until you reach your goal, whether it’s buying a new car, saving for retirement, or paying off your student loan debt. Setting a goal for your finances is the best way to turn your money into something of value. Learn how to take control of your money with these personal finance tips.