How Can I Keep Track of My Spending Patterns?

You Might Be Surprised to See Where Your Money Goes

People creating a personal budget and tracking expenses
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Have you ever tried to lose weight by keeping a record of everything you eat? Sometimes the results are surprising. You may not realize just how many cookies you consume until you track the data. Budgeting is similar. You may not realize how much money you’re spending on coffee, food, or clothes until you track the data. Logging your dietary habits helps you develop an accurate idea of how many calories you consume every day. Similarly, tracking your spending habits helps you discover how much money you’re spending – which might be wildly different from the amount you think you’re spending.

Tracking Spending

Many beginners track every transaction for two weeks to one month before they create a budget. That's a good starting point if you've never tracked your spending before.

After you create a budget, continue tracking your spending to see how your “actual” spending habits align with the “ideas” you’ve outlined in your budget. Budgeting worksheets can help you compare your “actual” against your “ideal.”

Trouble With Tracking

The variety of payment methods can make tracking your expenses tough. How can a person reasonably keep track of every single cash, credit card, debit card, check, automatic bank withdrawal, and PayPal transaction? There are many ways to track spending and adhere to a personal budget. 

Stop Using Cash

You have automatic, electronic records of every credit card, debit card, check, automatic bank withdrawal and PayPal transaction. The only type of transaction that isn’t recorded automatically is cash.

If you stop buying things with cash, you’ll spare yourself from the hassle of manually recording your spending. Instead, you can review your electronic records one day a week and input these records into one centralized location. You can use a spreadsheet, a notebook, or budgeting worksheet.

Beware, though – some people spend more money when they’re swiping plastic and less when they have to part with green bills. If you fall into this category, continue paying with cash. ​There’s no reason to put yourself in a situation in which you’re likely to spend more.

The Envelope System

At the beginning of each week, stuff envelopes with cash. Dedicate each envelope to a particular spending category, and note the amount you put into each envelope. For example, your envelopes might be labeled “Lunch $25,” “Gasoline $75” and “Target $40.” Since you can’t perfectly predict all your expenses, especially in the beginning, keep one “Miscellaneous” envelope as well.

At the end of the week, note the amount you have left in each envelope. Your lunch envelope, for example, may have $5 left. Your gasoline envelope may have $12 remaining. Your Target envelope may have gone “over budget” – you had to use $10 from the “Miscellaneous” envelope to cover the shortcoming. This is an easy way to track your spending. You’ll see your spending habits within broad categories without enduring the hassle of detailing every transaction.

Mark It Down

Keep a small notebook and pen in your purse or pocket, and log every transaction there. You could also log it into an app. The advantage? You’ll think harder about each expense. Writing down every transaction causes you to be more conscious about your spending habits at the moment you’re making the transaction.

The disadvantage? It’s a hassle. It’s easy to slack off or forget. And there’s no way to collect data retroactively if logging expenses slips your mind.