If you started budgeting and really serious about taking charge of your personal finance life to the next level, tracking your expenses is one of the fundamental thing you need to learn. In fact before you start budgeting you should already learn how to track your expenses.
On this article, I will share 5 simple ways to track your expenses and help you identify in what areas of your spending habits you spent most of your income.
I started tracking my personal expenses 3 years ago after I discovered my passion in personal finance. I was influenced by the Filipino personal finance blogs I read, Filipino Facebook group I joined, watching personal finance videos and all other related resources about personal finance.
After tracking my expenses, I realized that some of my money spent on non-sense things that doesn’t contribute value and meaning to my life. I was able to identify those unnecessary expenses and took action on them to cut it and increase my cash flow.
By tracking my expenses, I learn how to budget and save money. Not only that, I learn to value the things that matters most and avoid those things that were not important.
I tracked my expenses using my old school smartphone and then transfer it to an excel sheet every end of the month.
At the end of the month, on my free time I’m analyzing those data and making some simple reports about my own spending habit. It’s a bit OC you may say and that is true. I find it useful and more importantly I enjoy doing it.
That helped me became more aware how I spend my money. Up to now that I’m married, me and my wife still doing it. We take note of every single peso we spend each day and summarize them monthly. That’s fun and of course that helps!
Ok, let’s stop the drama! Let’s now talk about how tracking your expenses can really help you save money and increase your cash flow.
5 ways to track your expenses
1. Using pen and notebook (traditional method)
Using a pen and a small notebook is the most basic way of tracking your expenses. This is the traditional yet the most effective way. Get a pen and a small notebook or a pocket notebook and bring them together with you.
Take note and write down every single peso you spend each day. Yes! Every single peso that came out from your wallet.
This could be tedious at the start but as I said you will get used to it and it will become your habit in the long run. It’s now up to you how you want to consolidate the list.
You can make a simple report like what I did and start identifying where you spend most of your money. Take note of those unnecessary expenses and make an action plan how to stop them.
On the following month, put your plan in action while still tracking your expenses. You’ll realized along the way how you improved and save more money.
2. Use your phone
If carrying a pen and a notebook is not ok for you, you can use your mobile phone to track your expenses. I’m not talking to apps or special software but just your barely phone.
Yes! Just your phone. A smart phone or not you can use that! Almost every phone came out today has included program like notes or others.
You can use them to save information about your daily expenses.
3. Use an app
If you have a smart phone you can take the advantage of it by installing an app that can help you track your expenses. There’s a lot of app available right now that are specifically designed to track your expenses.
You can check the list of 8 free budgeting apps here. Most of them are free and some are not. The good thing about using an app is it can automatically generate reports for you that you can use to analyze your spending.
By having this, it can you time and effort computing those amount and generating reports. This is a good option that you can use if you want to track your expenses.
Some examples of smart phone FREE apps are: mint.com, goodbudget, mvelopes, billguard and many more. They are all available for iOS and android users.
4. Use computer software/program
Aside from app, you can also use specialized software that really designed for personal finance. They also come with a tracking expense feature and will also help you generate reports from your expenses data.
These software also come with budgeting feature that you can use to budget your money. You just need to install them on your computer or laptop and you can start using them. There are also many FREE programs available that you can use.
Microsoft excel or google docs usually came with your laptop or computer and you can use them. Before you can use this, you still need to take note of those expenses via pen and notebook or whatever way that suits you and then encode them on these software or program.
If you find this useful for you, go ahead. The most important is you’re taking action.
5. Keep receipts
Sometimes in some occasions or situations like when you go shopping or say use your credit cards, it’s not applicable to write down or take note of your expenses. One thing you can do to keep track your expenses is to keep the receipts.
On your free time or audit date, you can encode those data from the receipts to make the reports or identify and evaluate your expenses.
Alright, the 5 simple ways above will definitely give you options to track your expenses. Choose which method is best for you and start taking action.
Make a personal commitment and discipline yourself to do it consistently. This will become a habit over the long term and it will become your daily routine. Start now!
As mentioned above, tracking your expenses is just a way to identify and evaluate your spending habit. This is just to know where your hard-earned money goes. The most important thing you need to know is you need to take action after knowing these things.
Having those data and reports is non-sense if you’re not going to use them. Once you have collected the information, you’ll have a good baseline of information to use to create your personal budget and or stop unnecessary expenses. Make an action plan and start executing them.
Remember that each small step you take will bring you closer to the fulfillment of your financial goals. Start small and move forward. Take action!
I just started tracking my expenses today using an app that I downloaded in the play store. I am annoyed at myself ’cause I spent almost Php 4,000 just for a day. Ugh. Anyway, the app is awesome ’cause I don’t need to use excel just to analyze my expenses. The app shows my expenses whenever I want in a pie chart. Okay, now I sound like I am endorsing an app. Anyway, aside from the app, I have the tendency to ask for the receipt and keep it. Lol. Your blog is so cool though. I’ve been binge reading your blog for an hour now and it inspired me to really be cautious on how I spend my money.
Good to hear Joy. Keep it up!:)
joseph jan arsua says
i can share this tips in my discussion about budgeting, its a good reference, and your tips are very useful.
Thanks Joseph! Godbless!