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June 9, 2018

Why You Should Track Your Spending and 3 Ways to Start

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It is so easy to spend money. Have you ever experienced getting your much awaited bonus one day and then “poof”, it’s all gone? Napakamot ka na lang sa ulo mo, at natanong mo sa sarili mo, “Anyare sa sahod/bonus ko? (Where did my money go?)

Well, you can easily answer that question when you track your expenses. Financial gurus out there would mention how important it is to keep track of your spending.

I will not argue with them. For me, understanding your spending habits is the crucial first step to get to your financial goals or wherever you want to go with your money. You work hard for your money so don’t you want to be mindful about where your money goes?

Tracking spending brings you awareness of your attitude towards money – what you spend, how much you spend and why you spend. It can be eye-opening experience to learn the reality of your financial situation and why you are not able to save for your goals.

Once you know where your money goes, you’ll detect the areas that need minor or major overhaul to change your situation for the better. It helps you cut off on things you find you shouldn’t be spending too much and that can really help you save money for the expenses you determine to prioritize.

So, how to track your spending?

I have to be honest, it’s not something you can do in an hour or a day. I’ve been tracking my daily spending for 3 years already. I used to record up to the centavo. (As an accountant myself, I am used to doing it anyway for other people’s businesses.) There are still those days when I forget to record, so I am not really consistent in those 3 years.

Oh, you don’t have to be an accountant to learn to track your spending and you don’t have to do it in 3 years. At least be consistent in a month or two to get the numbers that are not merely estimates. You just need a little bit of accuracy if you want to make the right decisions out of it.

It may seem like a tedious task, but in the end, let me tell you from my personal experience -it’s all worth it. I am doing it until now because it helps me control my finances and I also do budgeting hand in hand. Hey, it’s entirely optional, but you can be consistent too. You can also implement changes to your money while your tracking.

3 Ways to Track your Spending:

1. Record in a journal.

This is pretty much the old school option. You can use any notebook and transform it into a ledger with columns. The column headers should be the expense categories that you want to track such as food, transportation, rent, utilities, etc. You may even add budgeted amounts next to the categories so you will be reminded of your budget.

Now, record your daily expenses manually in your journal. For every record in each row, indicate the date and a bit of description of your expense and don’t forget to record the amount right below the applicable expense category.

At the end of the day or month, total the amounts in your journal and evaluate your records. Take time to check out where you spend the most or the least and if you have hit or missed your budget. The evaluation is important, so you would know what to change or continue doing for the next month.

2. Download and use an expense tracker app for your mobile.

There are many apps available for your mobile phones that lets you track your expenses. Most are free and some offer features with premium. My personal favorite is Money Lover. It is a useful tool with great interface. It lets you set and control budgets and have intuitive reports and charts available in just a tap of your phone. You can also set up your bank accounts, and create your own expense categories with cute icons and even manage your debt and loan categories.

The only downside is it’s not totally free. To be able to have a full experience of the features such as unlimited usage for budgets and account wallets, you need to have the premium version. And of course there are ads when you have the free version only. But hey, the cost is only about Php250 ($4.99), if this would help you manage your finances wisely, then the price for premium version is not bad at all.

3. Use spending tracker spreadsheet.

This is simply, the automated version of the journal/notebook. As an accountant, I am used to working with numbers and spreadsheets and I experienced creating an Excel accounting system for a business client and it includes the posting of expense features. So I figured one time, why not create an expense tracker spreadsheet for myself? So I did and now I use it to manage my own finances.

I created a simple Excel file, which I named My Wise Spending Tracker, that records expenses, automates totals, charts and save me time in managing my budget each month. You can get it right here for free:

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Once you get it, you just have to customize the categories based on your own personal expenses of course. Then you are good to go to track your daily spending by simply filling out the columns. The category column will already give you the list to choose from.

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Afterwards, you can easily analyze where you spend the most and the least by checking the automated charts. I suggest you check the charts after one month to really determine your spending behavior.

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And last but not the least, you can also manage your budget using My Wise Spending tracker. Have a glimpse of how much you have already spent and compare it easily with your provided budget. Those reds will tell you, “oops, you have spent too much” or maybe you need to adjust your budget the next month as what you’ve set initially is unrealistic.

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Conclusion

If you’re about reaching your financial goals, the very first step to be confident about it is to track your spending and understand your money habits. Also, if you think My Wise Spending tracker will help you out, like how it helped me manage my finances, grab your very own copy from below.

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Happy tracking and good luck! 

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