When it comes to tracking your income and spending, it can be a very tedious and tiring process. I have found though, that overtime, the more I keep track of my finances, the easier it is to know how I am doing financially and keep up with financial goals.
If you are anything like my boyfriend, you have never going through your month of income and expenses and seen exactly what is coming in and out and how you are doing financially. This can be dangerous, because you may be spending more than you are making, and digging yourself into a whole. The only way to really know is to go through everything individually, to see where your money is coming in and out.
I personally enjoy tracking everything down physically in a notebook, but excel or word might be more enjoyable to you. All you need is a notebook, a pen and/or pencil, and access to your online banking accounts. You may also need to have your receipts, if you are likely to forget what you bought or if you paid in cash for some things.
To start, write the current month you are tracking and the year at the top. Under that write “Income:.” Leave some space and write “Expenses:” as the next category. I like to break down my expenses into subcategories, “Credit:, Debit:, and Cash:.” If you have more than one checking account or credit card, you might want to have those in separate categories as well. I also like to track my transfers, so I make a category called “Transfers:” but this is optional.
Under each category, I track every transaction individually. With each transaction I include the date, amount spent or received, the place it was spent or came from, and more specific details so I know what was purchased or why it was received. For example: 8/19 -$10.11 Walmart – Groceries
This helps me when I go back later and track the individual spending categories. Its up to you if you want to track individual items or the sum of and individual transaction. For example if you when to Walmart and bought groceries and clothes, you might want to track the food and clothes under separate transactions.
I go through all my income, including cash, then all the transactions for the month spend on my credit card, debit card, and what I spent in cash. You can do this all at once at the end of the month, or update throughout the month as you spend money. I like to update my finance tracking every few days throughout the month so It doesn’t take as long to analyze at the end of the month.
Once the end of the month hits and I have everything writen down in its category, I go back and marked the spending categories with different colors to represent what type of thing I bought. For example, “Car Washes, Fast Food, Groceries, Hygiene, Fast Food, Subscriptions, Dates, Rent, Car Insurance, Internet, Rent, Utilities, Doctor Bills, Medications, Entertainment, Clothes, Gas, Gifts” and any other categories you want to include. Once I have those color coded, I go through and add up all the categories, separately and then together. “Total Income=, Total Transfers=, Total Expenses=, Total Spent in Credit=, Total Spent in Debit=, Total Spent in Cash=.” Then I add up the individual categories of the expenses. The sum of the amount spent by categories should equal the total expenses.
Once I have all of that totaled, I can see how much I made, how much I spent, and how much I transferred to savings. Doing this every month really helps me to see if I am doing well, and what I need to individually improve. These factors guide me for my budgeting goals for the next month. If I spent too much eating out, I know I need to improve that next month. If I have upcoming expenses that I already know of in the next month, I can add that into next month’s budgeting goal. Doing intensive tracking can also help to make sure you are meeting your savings goals and see where you need to cut back on.
In conclusion, I have personally found tracking my finances every month to be very important. I hope that this guide will help you if you are new to budgeting and want to help understand how it can be helpful to meet your financial goals.
