5-Minute Finance: Track Your Spending


How often do you find yourself in the red at the end of each month, wondering where all your money went? If you're like many Americans, living paycheck to paycheck with too much debt and too little savings is your normal. But it doesn't have to be. There is a solution that can pull you out of your mindless spending habits, and it's a simple one; tracking your money.

What is tracking?

Tracking your finances is the act of writing down or digitally logging everything you spend for the month. This includes every expense, big and small, from your mortgage payment to that $2 soda you bought on a whim.

The goal is to find out how much you are spending compared to how much income you are bringing home. If you spend more than your monthly paychecks, you are probably relying on credit cards to fill the gap, which is driving you further into debt. If you are spending exactly what you make, you are not leaving yourself enough room in your budget to build an emergency fund, save for retirement, or pay down debt.

Think of tracking as a checkup for your finances. You need to see what your current financial state is so that you can improve it.

Why you should track your spending

If you constantly feel that you don't have enough cash each month, tracking solves the mystery of where your money is going. It'll show you the areas of your life where you are overspending or spending foolishly. Knowing where your money is going will allow you to address poor spending habits and get serious about financial goals, whether that be saving money for a down payment on a home or paying off your vehicles early.

There is a chance that you will discover that you cannot afford your current lifestyle. If you are only spending on the essentials and still don't have enough money to cover everything, you will either need to find a job that earns more money, take on a second job, or downgrade your current lifestyle. You may have to move into a smaller home, take your children out of private school or their costly extracurricular activities, or trade in pricey vehicles for more affordable ones. This is not the enjoyable side of tracking, but ignoring the facts will not make your situation easier or better.

How to start tracking your spending

There are several ways to track your spending, either with pen and paper, with simple computer programs like Excel, or with an app designed for tracking. The best method is the one you will use diligently.

For paper tracking

Any journal or notebook will work. You can also purchase an affordable expense tracker with designated pages that make it easier to keep track of bills and spending. Free tracking printables are available at Queen of Free and Simply Unscripted.

For computer tracking

A free Excel spreadsheet template may be all you need. Smart Sheets and SeedTime have free downloadable templates you can use.

If you prefer software to help you do your tracking, You Need a Budget is easy to use and allows you to input expenses manually. It does cost $83.99 a year, but you can try it free for 34 days. Personal Capital is a free program that connects to your financial accounts directly and shows you how much money you are spending in certain areas.

For mobile tracking

Mint is a popular free app that pulls info from your financial accounts automatically to make tracking easier. It also comes with a computer interface if you prefer to use it that way.

The BUDGT app is designed for those on small budgets and helps them get a better picture of their day by day spending.

Next steps

Once you know how much you are spending each month, you can find areas of your budget where you can make cuts. Cutting back on unnecessary spending will give you some breathing room to devote more money to debt, establish an emergency fund, or build a savings account.

Additional resources


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