When it comes to budgeting, one method that can help you succeed is to carefully track your expenses. For many people, tracking their expenses might not be too straightforward because of their circumstances.

However, to help you better and track your expenses and avoid a failed budget, there are some easy tips you need and we will reveal them to you in this article.

• 5 Easy Tips to Track Your Expenses
• What Should you do if your Budget Doesn’t Balance?
• What are some of the Possible Risks if you don’t keep Track of Personal Transactions?
• How do you Control Your Expenses?
• How do you Make an Expense Tracker?
• How do you Write Monthly Expenses?
• What are the 4 Types of Expenses?

5 Easy Tips to Track Your Expenses

1. Don’t focus too much on your failed budget

Step one is to keep going! The only way you fail is if you give up. Just because something didn’t work in your budget this go around, doesn’t mean that you can’t figure it out! We touched on it before. Failing is a part of life. If you aren’t failing, then you aren’t trying.

Read Also: The Best Apps you can use for Budgeting

You failed? So what! Keep going! There is always something to learn and something to do better next time! Keep shooting higher each time and even if you don’t hit your goal, you will most definitely get higher than if you kept shooting for the easy target.

2. Look out for warning Signs

You have to get ready so you know if it’s coming again! So what are some of the signs that you can look back on and identify that led to your misstep?  

Are there any spending triggers that led to your overspending? Stress, poor time management, or maybe a lack of planning. Were there any specific situations

Spending triggers

You can also look for situations that might have caused you to go off budget. Was a specific holiday or birthday what caused the chaos?

Or maybe you find that being around a certain group of friends brings on the pressure to overspend. Look back and look for the warning signs.

3. Be Prepared

Unplanned expenses can wreak havoc on a perfectly planned budget. So what can you do when you don’t know it’s coming?

The piece of advice here is that we have learned from our own experience, is that when you do have an unplanned expense come up, plan for it to happen again.

Chances are that this won’t be the only time this is going to happen. Start saving up the cash now to cover the costs next time. The more you pay attention to your current unplanned expenses, the less they will surprise you in the future.

The second thing to do is to make sure that you have a minimum of a $1,000-$2,000 emergency fund. Once you are debt free, work towards 3-6 months of expenses in an emergency savings.

It’s a bummer to have to dip into that savings to cover an emergency, but man-o-man it keeps your family safe and away from going deeper into debt!

4. Focus on What is Working for You?

You’re doing something right! You are smart and YOU know what’s best for your family! So what’s currently working? What are you currently doing that is getting you closer to your goals?

Write it down! That way you don’t forget or maybe next time this same situation comes up, you can reference back to your notes as a cheat sheet for what to do next.

5. Crush the insecurity and come out stronger

Now that you have highlighted what you are doing correct, you know how to avoid and overcome past mistakes, there is no need to feel insecure or fearful any longer!

When you come out the other side of your hurdle, your confidence is going to build your strength to overcome whatever comes next. Your capacity for what you can handle is going to grow!

“We just paid off $20,000 in debt. Let’s save $80,000 to pay cash for a house remodel!”

Your courage to work towards bigger dreams is going to get you further every time! If you can just keep going, even if it’s one breath at a time, keep pushing forward and crush your insecurity of challenges to come.

What Should you do if your Budget Doesn’t Balance?

A failed budget can be really frustrating especially after you have followed all the trick in the books, but don’t beat yourself about it. Like one of the tips above mentioned, don’t focus too much on the budget that failed.

Instead here are some thing you need to do if your budget doesn’t balance.

It doesn’t take an act of Congress to balance your budget. You just need a commitment to financial goals, determination to live below your means and a willingness to make the necessary adjustments.

Here are five ways to do it.

1. Establish your budget

Before creating a budget, review your financial history. Using bank and credit card statements, identify both how much income you take in, and how much you typically spend on expenses. Compile the financial information into two separate categories: expected income and expected expenses.

Expected income should include wages, self-employment income, investment income and other sources of income. Next, list expected expenses such as mortgage or rent, utilities, and cable and cellphone costs.

Lastly, subtract expected expenses from expected income to determine the amount you have available after expenses are paid. The available amount should be put away for rainy days, used to pay down debt or applied to other financial goals.

2. Separate the necessities from the wants

Further separate your expected expenses into two additional categories: discretionary expenses and nondiscretionary expenses.

Discretionary expenses are simply “wants,” such as entertainment, dining out or gym memberships. Nondiscretionary expenses are necessities, such as rent, utilities and groceries.

Review discretionary expenses to see whether you can identify costs that could be eliminated or reduced.

3. Track your expenses

Periodically update your budget to list the actual expenses for each category. Compare budgeted amounts with actual spending.

If you are tech-savvy, use smartphone budgeting applications to help you keep track of expenses. Or, if you enjoy recording the old-fashioned way, keep a notepad to document your expenses.

4. Review and adjust frequently

Prepare a budget at the beginning of each month or every pay cycle. This gives you an opportunity to review your prior month’s budget and identify areas where you need to control spending.

Make any adjustments necessary to help you reach financial goals, such as saving or reducing debt.

5. Budget for life’s pleasures

Consider planning for certain indulgences, such as date nights, or a new dress or pair of shoes. Planning ahead of time will help you understand what you can afford, and also serves as a reminder to treat yourself every now and then.

Your budget is a work in progress. Commit to your budget and make adjustments to ensure you create a budget that works for you.

What are some of the Possible Risks if you don’t keep Track of Personal Transactions?

Understanding why you should track your spending is different than actually doing it. Some young adults start monitoring their expenses in order to please their parents or because they think it is what you are supposed to do.

It is not uncommon for people to do this without understanding why it is important. We generally think that understanding why it’s important is crucial. If you aren’t sure why you are doing something, you will often stop.

It’s YOUR Money:

The first major reason why we think everyone should track their spending is because it is your money. It isn’t someone else’s that you can just throw away without any consequences.

It is your money that you earned through hard work and determination. Just like anything else in life, keeping a close eye on the things that matter in your life is essential.

If you are growing a garden, you realize that it takes a little time and focus to grow it. It’s not going to happen without the attention necessary. In the same way, paying attention to where you spend YOUR money is a natural part of being responsible with your finances.

Not only is it natural to pay close attention to where you money goes, you need to make sure that no one is stealing from you. 

While you may think that no one would cheat you (because you wouldn’t cheat anyone else), this is far from the truth. People’s credit cards are compromised everyday, so you never know when a fraudulent charge will come up.

If you’re not paying attention to the bill, you’ll never even know that someone is cheating you.

If you have recently found out that you are throwing your money away AND want to change, it first has to start with where you are spending your money.

Did you know that a lot of people can not answer how much of their budget they are spending on food or transportation? The easiest way to go into debt is to stop paying attention to where you are spending your money.

The alternative is also true: a great way to save money (whether it be for vacation, retirement, or a new car) is to start tracking your spending. Once you do this, you will be able to limit yourself next month.

If you want to start taking charge of your finances, start paying attention to where you are spending your money.

Technology has made it significantly easier to track your expenses then ever before, so there’s no excuse. You have the power to change your financial situation today.

When you think about the ways you might want to spend an evening, you might imagine yourself curled up with a good book, camped out in front of the TV, or at a restaurant having dinner with friends.

Chances are, a few hours of quality time with a spreadsheet and calculator aren’t going to top your list.

But if you don’t make a little time to create a budget, and then pledge to stick to it afterward, your finances are likely to take a turn for the worse. Here are a few nasty consequences that might ensue if you neglect to budget.

1. You’ll lose track of your spending

The purpose of having a budget is to see where your money is going, and where there’s room to spend less. Therefore, if you don’t follow a budget, you risk walking around virtually clueless about what your expenses actually cost you, and that might lead you to make some pretty poor decisions.

Imagine you think you’re spending $600 a month on groceries, and so you decide to sign up for a meal-planning service that costs you just $500 a month instead.

That’s $100 in savings right there! Ah, but not so fast — if it turns out you only spend $400 a month on groceries, suddenly, you’re overpaying in a spending category you could’ve otherwise kept down.

2. You’ll fall short on your savings goals

Whether you’re saving for emergencies, retirement, a home, or another milestone, if you don’t know where your money is going, you’ll have a harder time curbing your spending and freeing up cash to put in the bank — or, in the case of retirement, a 401(k) or IRA. And that could hurt you in the long run.

Say you want to retire at a young age with a sizeable nest egg, and you figure out that to do so, you’ll need to consistently set aside $300 a month during your working years.

If you lose track of your spending, you might miss that mark time after time, thereby lowering your chances of getting to retire when you want and how you want.

3. You’ll increase your risk of landing in debt

It’s easy to overspend when you have no idea how much your bills cost you regularly and how much you can afford to be paying for living expenses given your take-home earnings.

As such, not following a budget increases your chances of racking up costly credit card debt — debt that can trap you in a seemingly never-ending interest cycle before you know it.

4. You’ll damage your credit

Overspending to the point of credit card debt can send your credit score plummeting. That’s because one major factor in determining that score is credit utilization, or the extent to which you use your available credit.

If you carry too high a balance, your credit score might take a tumble, and once that happens, you might find it difficult to buy a home, rent an apartment, or even get a job.

Without a budget, however, you risk overspending and damaging your credit in the process.

How do you Control Your Expenses?

While managing your expenses is the best way to avoid debt, it can also be an uphill battle. That’s why it’s important to have a plan in place. That way, you can avoid accumulating debt simply by following a few simple rules. Below, you’ll find ten ways to cut down on your expenses, avoid financial pitfalls, and stay out of debt in the process.

1. Make a Budget

Develop a realistic budget and stick to it. Review your budget periodically and revise it when necessary. There are many easy ways to develop a budgeting system such as spreadsheets or online software and apps. These programs will help you determine how much you are spending and saving.

2. Stop purchasing based on impulse

Curb your impulse buying. If you see something that you want to buy, don’t! Go home and mull it over. If you do this, you probably won’t return to the store to make the purchase. Ask yourself if you really need this object and chances are the answer is you probably won’t.

3. Limit debt

Limit the amount of debt that you take on. A rule of thumb is monthly payments on your debts (not including your mortgage) should not exceed 20 percent of your take-home pay.

4. Pay off debts in full

Charge only those items that you can pay off in full when you receive your credit card bill. Don’t get into the habit of maxing out your credit cards and just paying the minimum payment. This irresponsible habit means you’re continually spending more than you have and you are collecting more debt due to high credit card interest rates.

5. Reasonable mortgage and rental payments

Keep your mortgage or rent payments reasonable. Don’t saddle yourself with huge housing costs. Only take on obligations that you can easily afford now. The general rule of thumb is that rental payments should be either one-fourth or one-third of your monthly income. For example, if an individual makes $3,000 a month and a rent price of $1000 or less will allow him or her to save comfortably.

6. Develop alternatives to spending money

Make it a hobby to develop alternatives to spending a lot of money. Instead of dining out, go for a walk and have a picnic. Rent books and CDs at the library instead of buying them. Try to take advantage of promotions going on in your city. For example, many cities have a day where museums are free or even half off.

7. Invest Wisely

Make prudent investments. Avoid investments that promise a high return, like penny stocks, junk bonds, and speculative deals. The reason that those investments offer a high return is that they are extremely risky!

8. Don’t cosign or guaranty

Don’t cosign or guaranty an obligation for someone else. If that person doesn’t pay, you will be responsible for repayment.

9. Obtain adequate home and auto insurance

Be sure that you have adequate insurance on your home, its contents, and your automobiles. An individual can have major bills if they do not have adequate insurance. For example, if you were involved in a major car accident due to fault of your own and do not have adequate insurance, you may be responsible for most of the cost of repairs and damages out of pocket.

10. Obtain adequate health insurance

Be sure that you have adequate health insurance coverage at all times. Health bills can pile up and be in the thousands of dollars. It would be in your best interest to have health insurance to protect yourself from being obligated to pay expensive health bills.

How do you Make an Expense Tracker?

Step 1: Create a Budget

You won’t be able to track expenses without one. What’s a budget? It’s your monthly money plan—your expected income and expenses put in categories for the whole month.

A budget doesn’t control you; you control it. It’s a guide you set up to make sure your money is doing what you’re telling it to do.

There are three basic steps to setting up a budget:

• Write down your monthly income.
• Write out your monthly expenses.
  • Start with food, shelter (your mortgage or rent plus utilities), clothing, and transportation.
  • Once those are covered, list out all other expenses like entertainment, eating out, pan flute lessons, television streaming services, gym memberships, giving, saving, etc.
  • If you’re new to budgeting and not sure where to start, check out our recommended budget percentages.
• Make sure your income minus your expenses equals zero.
  • If the math doesn’t work out, you need to adjust your categories until you get that zero-based budget.

We could talk about tips for setting up budgets all day long, but that’s a quick summary.

Step 2: Record Your Expenses

Every day. We mean it. Every. Day. If you don’t keep up with what you’re spending, you’ll be living in a fantasy land where wallets never go empty and bank accounts stay busting and full. That’d be great—but it isn’t the real world. In the real world, you have to keep up with what you spend.

This action is key in communicating to your spouse and yourself what money is left to use in all those categories you set up through step one. And that brings us to the next step.

Step 3: Watch Those Amounts

Tracking your expenses can help make sure you don’t overspend in any area. When you enter an expense, make sure you keep track of how much is left in that category.

If you’re married, make sure both of you are recording all spending and checking in with each other before you spend. This is great for accountability and communication. That way neither one of you will ever say, “I didn’t know you spent most of the entertainment budget buying tickets to the wax museum. I wanted to sign us up for a couples beatbox class.”

Budgets are blown when you don’t track and watch your expenses.

How do you Write Monthly Expenses?

For those who are uneasy about writing a budget, are unsure where to start, or simply need a little push in the right direction, we are here to help.

The following information is dedicated to helping first-time budget writers — with all levels of debt and income — find their ideal monthly budget. We hope it guides every reader toward financial freedom and independence!

Step 1: Calculate Total Income

Budgeters should begin their monthly budget process by figuring out how much they (and if applicable, a spouse or partner) bring home each month. Start by calculating the total take-home pay (after tax) for the household. This figure should include every ongoing source of income.

Step 2: List and Tally All Expenses

Step two involves calculating all regular bills (mortgage, utilities, student loans, credit cards, insurance, cell phones, etc.) and any irregular bills (quarterly payments like insurance) that are due the following month.

The next step involves totaling what is generally spent on all other expenses: groceries, eating out, coffee, gas, entertainment, etc. Every dollar spent should be accounted for.

Step 3: Subtract Expenses from Income to Equal Zero

Subtracting total expenses from the total income will reveal how much each individual or household is (or is not) spending each month. Some financial experts suggest configuring this part of the budget to create something called a “zero-based budget,” where the total income minus all expenses (including any savings, loans, or investments) equals zero.

This method ensures that money is told exactly “where” to go — into savings, towards paying down student loans, etc. — and therefore, cannot be spent in any other way.

Step 4: Monitor and Track Expenses Each Month

Diligence and commitment are necessary elements of all financial budgets, and staying on track — and minding the original monthly budget — can be a hard task for even the most dedicated budget-master.

To help those who are serious about their budget, or simply need a little extra accountability, special tracking tools, and apps exists to help users monitor and maintain their expenses. Here are some free options and community favorites:

1. Write one down on pen and paper.
2. Develop a personal Excel spreadsheet.
3. The Envelope System. This system involves acknowledging and setting up categories in which a person usually overspends (eating out, clothes, groceries, etc.). Each month, money for these categories is cashed out (so money is not in the bank) and carried with the person in dedicated envelopes or clips. This enables each person to visually see how much money is being spent in each category, as well as how much money remains throughout the month.
4. Dave Ramsey’s Every Dollar software and budget app is a quick and easy way to see what is planned for the budget, what has been spent, and what remains.
5. Mint by Intuit is a well-known budgeting app that automatically tracks a user’s finances. Users simply enter basic financial information and the program tracks the rest. Other benefits include goal setting options and data that feeds into TurboTax at tax time.
6. PearBudget is a really simple budgeting and expense tracking service. It contains common and customizable expense categories, is secure, and it is easy-to-use for first-time budgeters. Some may find it less automated than Mint, but users do get some extra goal setting and planning features. PearBudget costs $4.95 a month after a free, 30-day trial.
7. Clarity Money is a free budgeting app that can also help you manage your finances and track your spending by recommending ways to lower your bills, manage your subscriptions, and get the best credit card deals.
8. GnuCash is a fairly robust accounting software program that is both free and suitable for most operating systems — as well as home and small business use. Along with its ability to track income and spending, the software also tracks banking, investing, and retirement accounts.

Saving money, paying down student loans, and getting out of debt takes time. With a plan and a dedicated budget, the journey can be much shorter and less stressful. When budgeting, it is also important to live reasonably and spend within — and possibly below — your means whenever possible.

A generous cut-back on unnecessary and frivolous expenses is a necessary part of creating a budget, but remember that it is ok to live comfortably and have some fun every now and then.

Just make sure some “fun money” is written into the budgeted plan so that these expenses do not hinder the main objective — getting out of debt and saving money.

What are the 4 Types of Expenses?

A big step towards getting a handle on your budget is knowing your expenses. You might think expenses are expenses. If the money’s going out, it’s an expense. But here at Fiscal Fitness, we like to think of your expenses in four distinct ways: fixed, recurring, non-recurring, and whammies (the worst kind of expense, by far). 

What are these different types of expenses and why do they matter? We’re glad you asked.

Let’s dive in.

Fixed Expense

Fixed expenses are the kind of expenses most people think of when they’re drafting a budget. They are standard expenses that happen every month, on a certain day, and for a certain amount. Your mortgage, cell phone bill, car payment, gym membership, utilities, and Netflix are all fixed expenses. Think of fixed expenses like your bills. 

Weekly expenses like a daycare payment, dog walking services, or house cleaners, while not a monthly bill, are fixed expenses too. They occur on a regular date and for a standard amount, even if that withdrawal happens multiple times during a month. 

Recurring Expense

We sometimes refer to recurring expenses as day-to-day expenses. They are the types of expenses or purchases that happen throughout the month. They are not as predictable as fixed expenses in terms of their dates or amounts, but they reliably happen. Some recurring expenses you probably have are groceries, gasoline, eating out, and Target runs (who can resist a Target run?).

Non-Recurring Expense

Non-recurring expenses are the ones that trip people up all the time when they decide to get on a budget. These expenses may only happen once or a couple of times a year. But when they hit, they might hit big, so forgetting to account for them can be a costly mistake.

Read Also: Common Budgeting Mistakes People Make

Common examples of non-recurring expenses include a water bill, car registration fees, or your Amazon Prime membership. 

But non-recurring expenses aren’t just bills. They’re annual or semi-annual purchases you make and need to make, like for example, clothes, shoes, and other apparel.

If you live in a state where seasons change, chances are you’re making at least a few strategic wardrobe updates a year. Or for our clients in warmer climates, budgeting for semi-annual pool maintenance might be a non-recurring expense. 

Whammy Expense

Whammies are the most frustrating kind of expenses. These are for the most part unpredictable. You don’t know when they hit or what they’ll cost you, but you will most definitely feel it when they do. Think of some worst-case scenarios: Your car gets totaled. Your roof starts leaking, and you find out you need to reshingle the whole thing.

The federal taxes you owe are thousands more than you thought they’d be. These are emergency type expenses. If you’re a believer in Murphy’s law, then you know it’s not a matter of if, but when. The whammies will get you at some point.

Conclusion

If you want to do well with your budget, you need to play attention to how you track your expenses. If this is properly done, it will eventually lead to financial freedom for you.