HEY FAM! If you’re here, you’re probably interested in getting control of your money. I get it. There’s nothing more anxiety-inducing than feeling like your finances are out of control. One of the FIRST steps to tackle it is to track your spending and income. Remember that quote, “If you can track it, you can control it”? That’s where we are, fam. We gotta track your money.
We have to know where our money is coming from and where it’s going, so we can control it later.
Tracking your money doesn’t mean you’re going to be obligated to make major changes or switch up your lifestyle. The value in tracking your money is in the knowledge itself.
That knowledge allows you the insight and the clarity to decide IF major changes are needed. Remember, I’m not a big believer in crazy cut-backs to our spending. Any changes you make based on the insights you learn through tracking your expenses have to be SUSTAINABLE. Even minor behavior modifications can make a huge difference, and are often easier to sustain. Your behavior has to be firmly based in your “why”, your reason or your goal for your financial journey.
What’s in it for me?
Knowing how much money is coming in each month and how much is going out (and where!) allows you to be thoughtful going forward with what you’re investing in. It allows us to bring our spending back into alignment with our VALUES.
For example, maybe you’re spending a good chunk of change on groceries, but always have to throw out leftover food at the end of the week. If you can streamline your grocery budget, you can free up some cash to support a local nonprofit you’re passionate about. When you track your money, you have the insight you need to create a really beautiful, thoughtful life.
I guarantee (100% cash back if I’m wrong), you’ll be far more fulfilled once your values and your spending are a little better aligned.
Another benefit to tracking your expenses is that you can begin to identify places where you’re wasting money. There might be an old subscription you completely forgot that’s still coming out of your account on a regular basis. Or, maybe you’re paying for three different music apps and only need one.
Tracking your expenses also creates a dynamite opportunity for you and your significant other to get on the same page. Don’t talk through your finances from a scarcity mindset (there aren’t enough resources to go around). Instead, tackle it with an abundance mindset to work together to align spending and values. Conflict is more often created in the spaces where there isn’t understanding – once you’re tracking where the money is going, you’re armed with the information needed to actually avoid conflict! Cool, huh?
If you’re not convinced yet, let me throw one final reason at you. Tracking your expenses allows you to quickly catch any fraud or mistaken expenses so you can address it and resolve it in a timely manner. Same idea with tracking your income – you’re able to catch any discrepancies in your paycheck early on.
Let’s Track Your Money!
Listen, this isn’t the most fun exercise in the world, but it’s so, so necessary. I always do my best to make it an enjoyable break in my day so I look forward to the time. Pour yourself a glass of wine or a nice cup of tea. Turn on some good tunes, cozy up with your computer and settle in for a little money detective work.
One caveat before we start. There’s a chance that coming face-to-face with your money habits can dig up some feelings of frustration or embarrassment or shame. That’s okay! We’re here to grow and sometimes growth can be painful. A healthy money mindset is one of abundance – you can dwell in the fact that you have ENOUGH – whether that’s time, money or ability.
Remember, this exercise is only about the numbers right now. We’ve gotta track your money, not your feelings. My favorite tip is to pretend the numbers belong to someone else. Pretend you’re an unattached detective looking into someone else’s finances. Take a deep breath, but please don’t quit. This exercise is too important.
Alright, here we go friends. I’ve formatted this into one easy step-by-step list of actions so you can easily follow along.
Track Your Expenses
- Open an Excel spreadsheet. If you don’t have Excel on your computer, try Google Sheets.
- Identify some simple categories for your monthly expenses. Things like: Rent, Utilities, Internet, Phone, Car, Eating Out, Groceries, Gym, Personal Items. Just choose some and start. The categories don’t have to be perfect. You can adjust down the road.
- If you need a starting point, download the simple Money Tracker template I use each year.
- Log into your bank accounts and scroll back. Yep, keep going back. Start three months ago, and begin plugging in each expense into its appropriate category. Divide out your expenses by month. Work your way to the present day.
- Why three months? Sometimes, we have one-off expenses that completely throw our calculations off, but by extending the analysis into several months, you get a more robust picture of your trends and the ‘normals’.
- As you enter the numbers, you may identify some additional categories, or areas where your categories need to shift. You may also find subscriptions you’re paying for but not using any more. In those cases, take down a note so you can come back to it later.
- Spend some time reviewing the numbers. I like to create simple charts with the totals of every category to see how they compare. Do the numbers feel right? Are you surprised by anything you see? What categories represent the majority of your monthly spend?
Track Your Income
- In the same Google Sheet or Excel spreadsheet, add a few rows for an income section.
- Look back at your bank accounts and plug in your income from the last three months. Make sure you take into consideration anything you receive outside of your job. Maybe you sold something on Ebay, or received an insurance payment. Any money that came into your account should be included.
- Bonus points for the Achievers among us: Look at your pay stubs from your employer and add rows in your spreadsheet for things like: Insurance, 401k, HSA, FSA, etc. Pro tip: make sure to adjust your income to reflect your full starting paycheck amount (before insurance, retirement, etc. are removed).
- Now, scroll to the bottom of the spreadsheet and calculate Income – Expenses under each month.
- Once that’s done, spend some time looking at your numbers. Is that number at the bottom of the sheet positive or negative? If positive, does it feel right? Does your checking account or savings account reflect that amount? It may not be exact because we’re just looking at a few months, but make sure that leftover amount is accounted for somewhere in your bank accounts.
Track your money with this Spending Tracker template.
Once you complete this exercise, you’ll be in the minority! You are unique! And I can promise you – every single person who goes through this exercise learns something. As soon as you become more aware of the money flowing outward, you are more aware of where you’re spending your energy and time.
It’s also a great way to manage any anxiety you’re feeling about money. The knowledge and insight around knowing your expenses and income is incomparable. It removes any shroud of mystery. Coupled with a healthy mindset, this knowledge is going to get you very far down the path toward financial stability.
Great, Now What?
Keep tracking! Yes, you get to hold onto the clarity you just felt after completing this 3-month exercise. Get into the habit of logging your income and expenses each day. Ideally, you’ll enter an expense into your spreadsheet as soon as possible after putting away that credit card. A couple of minutes is all it takes to maintain control over your finances.
Tracking your money on a daily basis gives you an automatic heads-up if you’re getting too spendy, or if you’ve got a regular expense coming up. You’ll begin to identify weekly or monthly trends. Do you tend to spend more on eating out at the end of the week when you’re tired? Now you know, so you can adjust your behavior accordingly.
At the end of each month, I review my numbers against past months and highlight any areas of concern. Based on the information at my fingertips, I typically set one or two goals for the coming month – maybe it’s to spend less in one category so I can set aside money to support a local cause. Or sometimes, it’s to spend more in an area I’ve neglected – dinners with friends or self care. I jot those thoughts down at the bottom of my spreadsheet so they’re front and center while I’m tracking each day.
If you’re ready to take the next step, check out this list of ways to find some immediate savings, now that you know where your money is going!
You Did It!
Listen, I’ll say it again: If you can track your money, you can control it.
You just tracked it! Now we can control it. Tell me in the comments below what surprised you the most after completing this exercise.