5 Tips to Help You Track Your Spending

Tracking your spending is essential to ensure your real-world expenses line up with your budget.

Having a budget is pointless if you never compare your spending against it. For this reason, it’s wise to track every expense you make each month in common spending categories such as gas, groceries and housing.

In this article, we’ll outline a few quick tips you can use to make tracking your spending more manageable. The most important thing to remember, however, is that no matter what strategy you choose, you need to make sure you can stick with it for the long haul.

Tracking your spending is only helpful if you can compare your spending to your budget over months and years.

Whether you track your spending in a notebook or use a spreadsheet or app, consistency and habits are the best ways to keep your spending in line with your financial goals.

Keep these five tips in mind when it comes to tracking your spending.

1. Expense tracking should work with your budget

There are two situations where tracking your spending can be beneficial:

1. Preparing to Create a Budget — First, you may want to track your spending in preparation for creating a budget so you can figure out the areas where you may be overspending. In this scenario, you may want to track your spending for a few weeks or months to get a better handle on where each dollar goes in any given month.
2. Tracking Your Spending in Budgeted Categories — After you create your budget, the most important next step is to track your spending to ensure you stay in line with your plan. In this situation, you’ll want to categorize your expenses into the groups you made for your budget (such as gas, groceries and entertainment) so you can monitor whether you’re under or over-spending in a particular area.

In both cases, tracking your spending will inform your decisions about your budget.

When tracking your expenses, you’ll find the most value in comparing your spending against some pre-determined value for each spending category.

“Am I spending too much on groceries this month?” “Do I have room in my budget to eat out some more this week?” “Am I saving enough money each month for retirement?”

Expense tracking without a budget is like going camping without a tent. It’s certainly something you can do, but it also makes the entire process more complex.

The whole point of tracking your expenses is so you can answer questions you might have about your finances.

2. Choose a tracking tool that meets your needs

There are several ways for you to track your spending. For example, many people keep a record of their expenses in spreadsheets and pen-and-paper lists, while others use budget-tracking apps on their phones.

While some of these solutions may feature bells and whistles such as bank integrations, loan calculators, goal tracking and net worth reports, make sure to focus on the main reason these apps are helpful.

Specifically, all your tracking solution needs to do is keep an accurate, timely record of where you spent your money and how much you have left in each category.

While advanced reports and fancy in-app calculators may seem appealing, you should remember that most of your time will go toward adding and updating your expenses.

It’s critical that you choose a solution that meets your individual needs and tracking preferences.

No matter what you choose, the key takeaway is that you’ll spend most of your time tracking and updating your expenses.

Because of how much time you’ll spend creating new entries, we highly recommend that you choose a solution that makes record-keeping as fast, easy and painless as possible.

3. Categorize expenses into general groups

Since the whole point of tracking your spending is to answer questions you may have about your budget and finances, you should organize your records into broad categories to make it easier for you to answer these questions.

For example, if you want to know how much you spent on groceries last month, it’s wise to have a category in your spending tracker specifically for groceries.

Otherwise, you’d have to go through all your expenses and add up any names you recognize as being for groceries in the last month.

Some common examples of expense groups include:

• Groceries
• Mortgage payments or rent payments

• Insurance

• Transportation

• Pet supplies

• Entertainment subscriptions

• Eating out

• Healthcare

• Savings

Importantly, you should organize your spending categories using the 50/30/20 budgeting rule as a way of better tracking your spending in certain areas.

This rule states that you should spend roughly 50% of your after-tax income on “Needs” such as housing and groceries, 30% of your income on “Wants” such as eating out and entertainment and 20% on “Savings” and other financial goals (such as retirement).

For example, you could organize your spending into the following broad categories:

• Needs — Groceries, mortgage, insurance, transportation
• Wants — Entertainment, eating out
• Savings — 401(k) contributions, IRA contributions

By matching your spending categories to the categories you use in your budget, you can make your life easier when comparing your real-world spending to your budgeted amounts.

As one final note, make sure you only track your spending under a few pre-defined groups.

For example, instead of separate categories such as “gas,” “car insurance” and “car maintenance,” consider making a single category labeled “transportation” or “car expenses” to make your life simpler.

Remember, simplicity and consistency are key. Don’t make your life harder by creating more categories than you can manage.

4. Have a dedicated expense day where you check your progress

After you’ve created a budget, chosen a spending tracking method or tool and started organizing your expenses into groups, it’s time to schedule a specific day when you check your progress toward your financial goals.

At first, tracking your expenses may be challenging since it interrupts your normal daily rhythm. However, your goal should be to ensure that your expense tracking becomes a habit, not a chore.

Did you purchase some fast food? Whip out your phone and record it while you’re standing in line. Find some new clothes on clearance? Pause for a moment and record the transaction in your notebook.

Over time, tracking your spending will become a natural part of daily life. It shouldn’t be something you have to do. It should just be something you do.

As a part of this, you should review your spending on a weekly or monthly basis to ensure you’re staying in line with your spending goals.

A budget can’t help if you never compare your spending to your goals. Keeping track of your spending won’t help if you never adjust your buying patterns.

If you need help staying in line with your spending goals, it might be wise to block off 15 minutes every week to ensure your spending is in line with your budget.

Additionally, you may want to schedule a day every month to review your finances and adjust your budget for the upcoming month (if needed).

By making it a habit to review your spending on a regular basis, you can make it easier to spot potential problems or gaps in your spending before they become an issue.

5. Take advantage of your bank’s digital tools and resources

Before you start down the road toward tracking your spending, consider the tools and other resources your bank has available to make the process easier.

Remember, tracking your spending is simply a means to an end for making sure you’re in line with your budget.

Since you most likely pay for your expenses with a card linked to your bank account, it’s wise to look into your bank’s reporting tools to see if they can help you track your spending.

At a minimum, it can be helpful to quickly export your transaction history from your bank’s desktop site or mobile app.

At Associated bank, we’re committed to ensuring you have the best possible tools and information available for managing your finances.

From our experienced local bankers and Associated Bank Digital, we can help guide you toward a spending and budgeting plan that works for you.

If you have any questions about tracking your spending, please don’t hesitate to give us a call at 800-236-8866 or schedule an appointment at any of our Associated Bank locations.