5 Best Ways to Keep Track of Expenses

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how to keep track of expenses
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Inflation rates in 2022 have been the highest they’ve ever been in the last 40 years. The average U.S. household spent 10% more on goods and services in 2022 than in 2021.

We may not have much control over rising prices, but we can improve how we track our expenses and manage our budget more efficiently.

Here are 5 tips on how to consistently keep track of your spending:

1. Take Advantage of Budgeting Templates

If you haven’t created your own spending spreadsheet yet, you can just make a copy of someone else’s spreadsheet. Better yet, use the Federal Trade Commission’s Budget Worksheet.

Even if you want a fully customized spending tracker, you’d be better off modifying a pre-existing template than starting from scratch. You could even take the best parts of various templates to create the best tracker for your situation.

2. Use a Budgeting System

It doesn’t matter if you use your own personal system, the 50-30-20 rule, or zero-based budgeting, as long as you have a budgeting system in place. This is because keeping track of your expenses is just the first step.

In the 50-30-20 rule, for example, the next step is to categorize and prioritize your spending. While in zero-based budgeting, you’ll need to justify and reallocate your spending based on your income. What you do after you write everything down is what matters the most.

By consistently following the steps outlined in your budgeting system, it will eventually be second nature to you. But until then, keep using the system.

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3. Save Time Through Automation

The main reason you want to keep track of your expenses is to save money. Well, guess what? Your time is also quite valuable. So even if you manage to save a lot of money by properly managing your budget, if it takes up too much of your time, then that added value is dampened somewhat.

So you should aim to save time as well by automating what you can. Setting up autopay on a lot of your recurring expenses is one way to save time.

Another way you can save time is by using Cushion’s Calendar Wizard. If you use your Google Calendar often, a great way to keep track of your expenses is to integrate their due dates into your calendar.

Cushion automatically scans your accounts for recurring expenses and then organizes them into one dashboard. From there, you can sync that information to your Google Calendar.

With just one click, our users can add all of their recurring payments to their personal calendars. Better yet, this bill calendar updates itself automatically, in real-time!

4. Always Maintain a Financial Cushion

Auto-pay is amazing until you get hit by an overdraft fee due to life’s unpredictability. So, you should always keep an extra month’s worth of budget in your checking account.

Eventually, you should aim to have a 3-month financial cushion so that you’re ready for anything that life may throw at you.

5. Find Ways to Stay Motivated

Being consistent is a superpower. Tracking your spending for one-month results in a small boost in your savings (or disposable income). Tracking your spending for a year is life-changing.

But let’s face it, being consistent is hard. So, you’ll need to find ways to keep yourself motivated until budgeting becomes as easy as breathing.

One great way to stay motivated is to include goals in your spending tracker. Remind yourself that you’re working towards something and that you’re constantly making progress.

Summary

The best way to keep track of your expenses is by creating your personalized spending tracker. But to save time, you can use existing budgeting spreadsheets as a base. The Federal Trade Commission’s Budget Worksheet is a great starting point, for example.

Be sure to use a budgeting system to make sure that your expense tracking is purposeful and actionable.

Save time when possible through automation. And if you decide to make use of auto-pay, be sure that you have at least a 1-month financial cushion so you don’t get hit by overdraft fees.

Finally, always remind yourself of what you’re working for to keep you on track. Consistency is the key to your financial success.

Last Updated on September 09, 2024
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Disclaimer: The information provided in this website is for educational purposes only and should not be considered as financial advice. Consult with a financial professional for personalized guidance regarding your specific situation.
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