This post may include affiliate links. That means I may earn a small commission if you click and make a purchase. I only recommend products I know and trust.
How often do you track your spending?
All the time?
Somewhere in between?
If you said never, don’t worry about it. Heck, 27% of Americans think they don’t need a budget so if you’re not keeping tabs on your spending, it’s not the end of the world.
And honestly, sometimes making a budget just isn’t that much fun.
Money comes in, then it’s gone again.
I used to struggle super hard with budgeting and saving money.
And I constantly asked myself: what can I be doing better?
Turns out the answer was fairly simple. I just needed to keep track of what I was spending.
Why You Need to Track Your Spending
Budgeting isn’t that complicated, or at least it’s not supposed to be.
You add up all your expenses, then subtract them from your income each month. Easy peasy, right?
The problem is that your income might stay the same from month to month but your spending may not.
Some months you may spend more because one of your kids has a birthday.
Or your car may need new tires.
And sometimes you end up off-course because cooking dinner at the end of a long day just isn’t in the cards and you go out to eat instead.
Budgeting isn’t perfect. I’ve blown my budget more times than I can count. But tracking my expenses saved me.
5 Great Reasons to Track Your Spending
1. It forces you to take an honest look at your spending habits.
There are two sides to the budgeting coin. What you’re spending, and why you’re spending it.
The why is important.
Money itself may not have any emotional value, but spending it does. It’s easy to spend more than you planned to when you’re stressed or tired or just in a funk.
Just FYI, I’m guilty of overspending for those reasons. More than once.
Does that make me a budgeting failure? Nope.
But it does mean that I let my emotions — and not my budget — dictate where my money went.
You might spend because you’re bored or stressed or anxious or feeling down. It’s easy to overspend because of poor planning, too.
That’s happened to me more than once. I’ve taken my kids to free events, for example, but because I forgot to pack water or snacks, ended up handing over cash to overpriced food vendors.
When you track your spending, it’s much easier to find the why because you know exactly where your money goes. You can see how your spending choices might have matched your mood or your situation on any given day.
And once you make that connection, you can start making different decisions about how you spend.
2. It can help you find balance in your budget.
A big part of budgeting comes down to separating needs from wants. It’s a lot easier for your budget to get thrown out of whack when the line between them is blurred.
Needs are the obvious things you spend money on each money. That covers:
- Your rent or mortgage payment
- Water and electric bills
- Health care
- Essential clothing
- Transportation and gas
- Cell phone
I also include internet service in this category because I run my freelance writing business online.
My kids are homeschooled so they’re with me 24/7 but you might also add childcare to your list of needs. I’d also put debt, like credit cards, student loans or car payments on the needs list because those bills have to be paid if you don’t want to wreck your credit.
How are wants different from needs?
The wants in your budget are the things you spend money on that you don’t necessarily need to live. Your list might include things like:
- Eating out
- Streaming subscription services or premium cable
- Traveling for fun
- Trips to the movies, concert tickets and other entertainment
- Getting your hair or nails professionally done
- Gym memberships
- New toys for the kids
- Clothes or shoes
- Furniture or cute accessories for your home
- Treats for yourself
There’s a lot of gray area here and one mama’s want may be someone else’s need. The point isn’t to nitpick. The goal here is to put what you’re spending in perspective.
That’s what happens when you focus on your spending.
You may not even realize how much you’re spending on wants vs. needs but it can be a real eye-opener once you start paying attention.
For example, last year I noticed I was spending a lot more on eating out than usual. I knew it wasn’t the smartest move budget-wise and it wasn’t doing much for my goal of maintaining a healthy weight either.
Tracking my spending helped me see that a hectic schedule and poor planning were totally screwing me up.
There were a lot of days where we ate out because we had soccer or church or homeschool group or something else going on that day. And I was just so overwhelmed by everything we had to do that it was easier to go to a restaurant than cook at home.
But it was wrecking my budget. So I changed up how I approached our schedule and I was able to cut back on how often we ate out.
Seeing just how much I was spending is what motivated me to make the change.
3. It can get you closer to your goals.
I love setting goals. It’s one of the smartest money habits I’ve adopted.
Every year, I set two or three big money goals for myself. One of them usually involves how much money I want my business to make for the year.
I also set savings goals. This year my third goal is to get the last of my student loan debt paid off.
Think about what matters to you most. What do you really want to do with your money?
It could be:
- Paying off your debt
- Getting out of the paycheck to paycheck cycle
- Creating your emergency fund
- Buying a new car
- Saving money for a down payment on a house
- Squirreling away money for your kids’ college fund
- Sending yourself back to school
- Starting a business
- Saving for retirement
You might want to do all these things, or none of them. Maybe your financial goals look completely different.
And that’s okay. We all have big goals we’re chasing. What ties us together is a desire to go after them.
Learning how to track your spending is a huge motivator. If you’re trying to save $20,000 for a down payment on a house, for example, that might make you think twice about spending an extra $20 here or $50 there.
4. It can help you develop better habits.
Habits are super-powerful things.
Our habits determine so much of our lives: what we wear, what we eat, where we go, who we’re friends with. And of course, how we spend and manage our money.
When you track your spending consciously and regularly, you’re developing a new habit.
Charles Duhigg, author of “The Power of Habit”, says that habits form when there’s a cue, routine and reward. The cue prompts you to act, the routine is the action and the reward is your payoff.
So what does that have to do with tracking your spending? When you know the emotional triggers that shape your spending habits, you can change the routine. And the reward is knowing that you stuck to your budget.
Tracking where, how and why you spend makes that possible.
5. It helps you to stop stressing about money.
Money used to be a HUGE source of anxiety for me. Making a conscious decision and effort to track my spending changed that.
As I got used to tracking my spending, it was easier to break the bad habits I’d fallen into. When I changed those habits, I had more money in my budget. That helped me pay down my debt and start saving.
And let me tell you, there’s no better high than having money in the bank when you’re a single mom.
When life throws a big juicy lemon at you, savings lets you handle it without missing a beat.
And when you have extra cash, you can splurge every so often without feeling guilty — or stressing — about it.
How to Track Your Expenses (Without It Feeling Like a Chore)
Hopefully, I’ve given you some solid reasons for why you should track your spending. Now let’s talk about how you can do it.
There’s no right or wrong way. You just have to pick a system that works best for you.
Need ideas? Here are three (mostly) painless ways to keep track of your expenses.
1. Write it down.
I love to write things down.
To-do lists. Goal lists. Business ideas. Recipes. Writing it out by hand makes me feel so much more connected to my thoughts.
One of the easiest ways to track your spending is to just write it down.
Get a small notebook you can carry with you. Any time you make a purchase, write it down. Or, hold on to all your receipts and record them at the end of the day.
The easier you can make the process, the better the odds of sticking with it.
2. Use a spreadsheet.
Some people are spreadsheet nerds. I’m not one of them but if you are, this is another option for tracking your expenses.
The great thing about using a spreadsheet to track your spending is that it’s customizable.
You can add different spending categories, remove the ones you don’t need and tweak the fonts to pretty it up.
And, you can use the Formulas function in Excel to easily add up your spending in any given category.
If you really want to get your nerd on, you can use the numbers in your sheet to make charts. Having a bar graph or pie chart that breaks down your spending can let you see what’s eating up the biggest chunk of your money from month to month.
And if you don’t want to make your own spreadsheet to track your budget and expenses, grab mine for FREE!!
3. Let an app track your spending for you.
Apps are great for tracking your spending and your budget.
You sync up your checking account or your credit card and the app does all the work of recording expenses for you. There’s no heavy lifting and you don’t have to worry about forgetting to write a purchase down.
There are a TON of apps out there that you can use to track your spending. The big question is, which one should you use?
If you’re clueless about which budgeting app is the best, here are three you can try:
Mint is one of the most popular budgeting apps out there. It’s free, which is great for the budget-conscious, and it’s also super easy to use.
With Mint, you can:
- Automatically track expenses
- Categorize your transactions
- Create spending reports
- Set your budget
- Track and pay your bills
- Check your credit score
You can get a complete financial picture from your cellphone or tablet.
I’ve used Mint before and as the website says, it really is an effortless way to manage your money in one place.
PocketGuard is a slightly different take on a budgeting app.
You can link your checking accounts, savings accounts, credit cards and investment accounts to the app. PocketGuard tracks your spending, and it even updates categorizes your transactions as they happen.
Besides telling you what you’ve spent and where this app can tell you how much you can safely spend after you’ve paid your bills or set aside money for savings.
The app also looks at your finances to find ways to lower your bills and help you find the best bank account for what you save.
Just like Mint, PocketGuard is free to sign up. If you need to be able to track cash in your budget, you can upgrade to PocketGuard Plus.
Just keep in mind that you’ll pay a monthly fee to unlock more features.
Personal Capital lets you do most of the basic budgeting functions you can do with Mint or PocketGuard.
That includes tracking your spending and generating budget reports. But, that’s just the tip of the iceberg.
You can also use this app to monitor your investments, create income reports and track your net worth.
If you’re focused on building wealth, Personal Capital has all the tools you need to create your financial plan.
It’s free to create a Personal Capital account and use the platform’s basic money management tools. There is a fee, however, when sign up to invest through the app’s wealth management service.
Do You Keep Track of What You Spend?
Whether you write it down, plug your expenses into a spreadsheet or use an app to track purchases, all that matters is that you do it consistently.
Over to you — do you keep a close on where your money goes?
Is there another app or expense tracking system you love, love, love? Tell me about it in the comments!
And please share this post it if you thought it was helpful!