
How to Track Spending
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.

- 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.
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