How To Track Your Expenses

Posted by Fitz Villafuerte under Money Saving Tips, Personal Finance, Productivity on November 27, 2007

A few years back, I’ve always wondered why I was never able to grow any money in my savings account.

It wasn’t until I started to account for my expenses that I realized how much I am actually spending on a daily basis.

As we go about our lives, we often only remember the expensive things we bought or the bills we regularly pay. We tend to overlook the small expenses which usually sums up to a significant amount at end of the month.

How To Keep Track of Your Expenses

Carry a tickler notebook or put a small piece of paper in your wallet to jot down your expenses. Using the notepad function of your tablet or mobile phone is also effective. It is important that you take note of your spending as soon as it was made because you might forget about it later on (Trust me, this has happened to me so many times.)

Make a simple spreadsheet document to list your expenses, I personally use Excel because it is a really handy format and something you can change often.

Include the following columns: date, amount, particulars and type. The last column is where you will classify the expense to be necessary, investment, avoidable and frivolous. These four expense types are the ones I use but if you want to create your own classification, then go ahead. Just make sure that you can differentiate which among them are necessary and unnecessary expenses.

Necessary expenses are essential costs of living, some of these include food, transportation and rent. Investment expenses are expenditures where you expect your money to return, lending money to a friend is a basic example. It can also include the purchase of items that will make money like buying an item which you plan to sell for profit.

Avoidable expenses are those you incurred under circumstances where a cheaper alternative was possible, example of which are cab fares you took because you don’t feel like riding a bus that day.

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Frivolous expenses are those which are totally unnecessary – that shirt you bought impulsively just because it’s on sale or that new can opener you bought from that television infomercial.

tracking-expenses

What happens next?

Now that you’re tracking your daily expenses, it will be easier to see if you’re living within your means. Some friends of mine found out that they are spending more than what they are normally earning after tracking their expenses for a couple of months; they changed their spending habits immediately and their savings account suddenly started breathing with life.

Moreover, tracking my personal expenses made me realize how I can save more money each month. I basically lessened my avoidable expenses and tried to abstain from frivolous expenses. Furthermore, I started looking for good investment expenses – like buying and selling computer parts online.

Learning how to live within our means is an important step in building wealth and a good grasp of our spending habits is an essential task we need to learn to achieve this.

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Photo courtesy of iStockPhoto


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19 Responses to “How To Track Your Expenses”


  1. […] Why not spend some time fixing your appointments and schedules or better yet, start an entry to track your expenses. Moreover, you could also try to bring a pocketbook along with you so that instead of reaching for […]

  2. […] Start by tracking your daily expenses. It just takes a few extra minutes each […]

  3. […] diplomatic and most importantly, offer to help in another way such as teaching him how to properly track his expenses so he won’t run out of money regularly. Both of you could also explore possible income […]

  4. Rat Race says:

    […] How much is your regular monthly income? Are you living within your means? If not, then better track your expenses and find ways to cut back. Simplify your life and get rid of the things you don’t really […]

  5. […] and anticipate your expenses and save up for an emergency fund. Three to six months worth of your monthly expenses is recommended. Once you have an emergency fund, you become more confident in taking investment […]

  6. […] save money that you will use to invest– track your expenses and pay yourself first. […]

  7. […] among us about budgeting and personal finance. Some of them said that they admire my diligence in tracking my expenses and keeping a monthly personal budget. Some shared how they’ve always wanted to do the same […]

  8. […] is the root of all evil. I believe that these are not enough and other financial habits such as expense tracking, wise spending and the concept of budget planning should also be taught to children as early as […]

  9. […] Do I have the discipline to track my expenses? […]

  10. Agnes says:

    You have such brilliant and doable ideas! I’m excited to share these with two friends who are currently facing tough times but are raring to be rich. What’s even greater is many are benefiting from your blogs. Wish you more abundance and blessings indeed!

  11. […] 1: You have to track your expenses. You need a comprehensive look at your monthly spending to determine your personal costs of […]

  12. […] own financial situation if you could afford to give your support. Again, we realize the value of tracking our expenses and the importance of having a personal budget. You should also be aware that it may seem that you […]

  13. […] How do you get to manage your budget and live within your means? It starts by just tracking your daily expenses. […]

  14. […] If you spend less you’ll have more money available to pay down debt and save for the future. Write down your expenses for a month to see where your money is going. You might be surprised by how easy it is to find […]

  15. Lillie says:

    Keeping a daily spending diary is an excellent way to monitor your expenses. You will be surprised at how much is spent during the day if you don’t track it. During by financial literacy workshops, I always challenge my students to do this for a week or more to see how much they can save in addition to realizing how much they spend unnecessarily.

  16. Ryan Paredez says:

    This is a good start. When people get asked what they spend their money on, they never seem to know or remember. Keeping track on a daily basis is a good way to go about it.

    Now there are tools that do this for you. Oh how technology has grown

  17. […] you start with your financial journey, you have to first start to analyze your spending habits, track your expenses, know your enemies and your allies toward financial success, learn to pay yourself first, live […]

  18. […] and start paying only in cash. More importantly, keep a small notebook, or use your smartphone to track all your spending so you can pinpoint your impulse buys and avoid them next […]

  19. […] How much do you spend each month? If you don’t know the answer, then it’s time for you to start tracking your expenses. […]

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