BACK TO BASICS – TRACKING EXPENSES

TRACKING EXPENSES FREQUENTLY

One of the things that had a big impact in helping me be successful with our finances was learning the importance of tracking my expenses as frequently as possible. This may not be right for everyone, but I never had much success with staying within the budgeted amounts I would set for myself before I started tracking expenses much more frequently. I would set a budget and then would go way over it almost every time. The problem was that I was recording what actually happened after too much time had gone by. Once the week had passed, I added up everything and would most times find out that I went over budget. I would be going along thinking that we were doing great and that I really hadn’t spent much. Then as I was recording what actually happened I would realize I forgot about many of the little purchases we made throughout the week. I realized that it wasn’t working to record everything after it already happened because it was too late to do anything at that point. There was no point in waiting to record my expenses at the end of the week. It was actually much easier to record things when they happened and it was so much more helpful in allowing me to see where we were at in terms of our budget while we could still have a chance to stick to it.

PLAN OUT YOUR WEEK

One thing that I have found to be really helpful is to plan out known purchases that will be part of my weekly expenses. I have a weekly budget that covers things like gas, groceries, and other items that might come up. But, as we all know there are almost always other things that come up depending on what is going on that week. I have found that if I try to think through the week first and put down an estimate of what I might need to spend, I have a better idea of how much cushion there might be left in the budget for the week. If it looks like expenses will be tighter in a given week, I will know to try to hold back on anything that isn’t really urgent. I do my grocery shopping at the start of my budget period so that I can record what was spent on groceries for the week, as that is usually the largest expense. If I had to spend more on groceries this week, I can determine if there is anything else we should hold off on until next week.

RECORD YOUR EXPENSES EACH DAY

Try setting a goal to record your expenses on a daily basis. If you miss some days, but record them on most days, you will have a much better handle on your spending. When I started updating my budget on a daily basis I was so much more successful with staying within the amount I wanted to spend. By recording expenses right after they occur, you won’t have the risk of forgetting about those little purchases that you made. I could quickly see if we had already hit our budget early in the week which would make me aware that any additional purchases I had to make that week would cause us to go over budget. That’s not to say that something might come up that I would need to purchase. However, knowing that the purchase would cause us to exceed our budget would make me put a little more thought into whether the item was really needed. When you don’t realize you have already spent your budget for the week, you may purchase something that you might not have had if you knew it did not fit in your budget.

DON’T FORGET ABOUT CREDIT CARD PURCHASES

If you use credit cards, it is very important to add the extra step of tracking your credit card expenses as they occur, not when the bill comes. One way to handle credit card purchases is to record the purchase against my budget as if I used cash. Then I subtract that amount out of my available checking balance (on a separate spreadsheet) – not in the actual checkbook register. I then add that amount back as “due to” whatever card it is. When the bill comes the amount of cash has already been set aside for all purchases that have been made. If you feel like you might not be disciplined enough to spend that money being held aside, consider making weekly payments on your credit card. Or do not use credit cards at all. That way you won’t end up with a bill at the end of the month that you don’t have the cash for.

LIMIT YOURSELF TO ONE CREDIT CARD IF POSSIBLE

The more cards you use, the easier it is to lose track of a purchase until the bill arrives. Make sure you have online access so that you can check your purchases frequently so that you don’t forget about any. If there is one available, it is also a good idea to get the app to access your credit card activity. That way you can periodically check it even when you are on the go. If you must use a separate card for a certain store other than what you typically use. Make sure to record the purchase as soon as you get home. For example, I have one card that is my main card. However, when I go to Target, I use the Target red card to get 5% off my purchases. I used to use the credit card version of this card, but have since switched to the debit card version of the card. It gives you the same benefit of the 5% off but takes the money from your checking account. The problem is that sometimes it takes a couple of days for the transaction to post against my bank account, so it could be easy to forget about until it comes through. To make sure I don’t forget about the purchase, I make sure to record that purchase as soon as I get home from the store.

FIND A METHOD THAT WORKS FOR YOU

There are many different options on how to record your expenses. Many people love some of the budgeting apps that allow you to track your expenses against your budget on the go. Some of them can even be automated, so if you struggle with taking the time to record your activity, that might be something to consider. I track my expense in a spreadsheet. However, you decide the best way to track your expense, the most important piece is to just make sure you are doing it as regularly as possible if you find that you are struggling with overspending. That is the best way to avoid accumulating all of those purchases that you had forgotten about by the time you go to update your budget.

Thanks so much for checking in! If you would like to hear the podcast version of this topic check out Lola’s Frugal Life Podcast! Also, be sure to check out my other blog posts on this site!

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