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A guide to expense tracking
From your monthly housing expenses to afternoon coffee at your favorite local shop, do you know what you spend every dollar on? With so much going on in daily life, you may want to consider using a personal expense tracker.
This simple tool allows you to keep an eye on your finances on a daily, weekly, or monthly basis. It can also help you stick to your budget and provide visibility into where your money goes every time a paycheck hits your bank account.
No matter what your financial situation looks like, tracking expenses can help you better manage and save your money. This guide dives into some of the best ways to track spending and maintain a monthly expense tracker.
How do expense trackers work?
By sorting all the different expenses you incur into separate categories, expense trackers can be an efficient way to track your spending regularly. They can highlight unnecessary spending, show you where there's room to cut back or save, and help you identify how much you need to set aside on essential items such as your mortgage, utility bills, and insurance.
As you build your expense tracker, you could aim to allocate about half of your monthly take-home pay toward necessities, which may include expenses like your rent. These tend to be fixed amounts that don't change monthly.
Discretionary charges — such as how much you spend on food or entertainment — may vary and are usually filed under wants, not needs. Best practice is to set aside around 30% of your budget for items like travel or entertainment that you may enjoy but do not need. You could also include a third category for paying off debts, including credit cards or student loans, and building up your savings and retirement accounts.
Below are some examples of relevant categories you may want to include in an expense tracker:
- Utilities, including phone and internet services, water, and electricity
- Rent
- Any insurance you have
- Mortgage
- Property taxes and fees
- Groceries
- Essential clothing and toiletries
- Transportation, including vehicle maintenance and insurance
- Childcare
- Prescription medication
- Student loans
- Child support
- Travel
- Recurring subscriptions, including streaming services
- Restaurants and food
- Gym or club memberships
- Credit card payments
- Savings, retirement, and emergency fund contributions
Types of expense trackers
There are multiple ways to track monthly expenses. Try experimenting with different methods to see what works best for you. Some ways to track spending include downloading a free, ready-made budget template you can find online or building your own customized spreadsheet.
You can also consider downloading a budgeting app or software that offers monthly or daily expense tracking and can be synced up to your bank account. This allows you to import your bank transactions for added convenience. Depending on the extent of their features, apps may be free of charge or vary in price. Many offer low-cost versions or complimentary trials, too.
Spreadsheets and templates
Keeping track of expenses doesn't have to be a tedious process. That said, one of the biggest benefits of using tools such as spreadsheets and templates to track spending is they often come at no additional expense.
They can be customized to your specific lifestyle and occupation and are often simple enough to build out on your own. However, it's important to stay disciplined enough to maintain the spreadsheets by regularly logging all expenses and income. Without documenting every dollar, your expense sheet won’t provide an accurate picture of your financial situation.
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Apps and online
Many digital budgeting tools and software programs are designed to make regular expense tracking a convenient and seamless process. Some online apps offer specialized features in addition to tracking spending online, which could come in handy if you run a small business or have a side hustle.
These options include the ability to create invoices, upload and store all your receipts in one place, monitor your credit score, and even provide investment advice so you can help grow your net worth.
Tracking your finances online from your tablet or mobile device also allows you to view your outgoing expenses and transactions across multiple accounts, credit cards, and mobile wallets. It can make it easy for you to immediately submit receipts and request any reimbursements when applicable.
Another benefit when you track expenses with apps is it can be done on the go no matter where you are in the world.
Potential benefits of expense trackers
When you track expenses regularly, you gain a better understanding into how much money you actually need each day, week, and month. Tracking spending also provides a detailed look at where you need to cut back and save money.
With every expense recorded in one place, you may realize you’re overspending in certain categories. For instance, take streaming services: $9.99 doesn’t sound like much for a single subscription, but it can add up if you’re subscribed to several different platforms. You also may discover recurring charges you forgot to cancel, which can quickly add up, too.
These financial insights, plus helpful features like automated reminders, can help you stay ahead of your bills and make payments on time and in full each month — which may help boost your financial standing over time.
Taxes
Avoid the stress of tax season or the stressful surprise bill that can come with it by keeping all your expense tracking in one place. Using apps to track expenses such as your mileage, rent, or utility bills may help you qualify for deductions and reduce your taxable income.
But remember: As your priorities shift and your financial situation changes, don't forget to revisit and tweak your expense tracker accordingly to reflect your current reality.