Budgeting is the most important thing you need to be doing to ensure your family’s financial freedom. But to stay on budget, you have to track your monthly spending.
Our debt-free journey has had ups and downs when it comes to our budget…it’s definitely a learning process. We have seen the effect of not tracking our spending by completely going over budget. And we’ve also seen the positive impact that monitoring our spending can make on our monthly budget.
To be successful and in complete control of your money, you need to budget and track your spending…that means every single purchase!
So, today we’re going to talk all about how to track your monthly spending and why.
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- 1 Steps to track your spending and stay on budget
- 2 Ways to track your monthly spending
- 3 What to remember when tracking
- 4 Conclusion
Steps to track your spending and stay on budget
There are three simple steps to tracking your monthly spending.
First, you have to sit down and make a budget. A budget is a way to tell your monthly income where it needs to go. By putting your money into categories, you can then begin to figure out how to track your monthly spending.
2. Track every purchase
After your budget is done, you start to track every expense. This is where things can get messy. You have to track it as soon as you spend it. Don’t try to keep track in your head or wait until the end of the month. Whatever method of tracking you choose, make sure to record your spending as soon as it’s spent.
3. Monitor your spending
Lastly, you have to keep a close eye on the remaining balance left after each purchase. Knowing how much you have spent and the remaining balance will help you stay in control of your budget.
Ways to track your monthly spending
There are several different ways to track your monthly spending. One way is no better than the other, so choose what you think will work the best for you.
There are hundreds of apps out there to fit your family’s needs for budgeting, tracking, and more. A couple free options that I have tried are…
Envelopes are a great way to start; they help you feel that emotional connection to your money. Spending cash versus a debit/credit card definitely feels different. It’s painful to see your envelope empty (especially when you still have half a month to go)!
With envelopes, you withdraw the money from the bank monthly or bimonthly and pay cash for everything. You write the total you spend directly on the envelope, and when the money is gone…it’s gone.
Spreadsheets are a great way to keep track of your monthly spending. If you’re a spreadsheet nerd, you can create your own template for tracking. There are tons of fancy budget and tracking spreadsheets on Etsy or with a quick internet search. But, a couple free options would be…
- Microsoft Excel budget templates (if you have Microsoft Office)
- Google Sheets budget templates
Pencil & Paper
Pencil and paper is the good ole’ fashion way of keeping track. Write down your spending categories and write down what and when you spend.
Personally, we found a huge whiteboard in our kitchen (like this one) works the best for our family. We write out our columns and subtract our spending from the remaining balance. It’s a great visual, and it is easy for my husband and me to keep an eye on our spending.
What to remember when tracking
There are a couple things that you need to know as you track your spending…
You have to get into the routine of writing down your spending after each purchase. It’s really easy to go over budget if you’re just “tallying” the amount in your head or waiting until the end of the month…trust me, I know.
Adjust your budget monthly
At the end of the month, you need to look at your remaining spending balance. If you came in under budget, assess and see if you need to decrease your monthly budgeted spending in that specific area. Or, if you went over budget, decide whether you need to budget more for that category or if you just went a little overboard with your spending.
If you find whatever method you chose is not working, make a change. There is no one way that you should be tracking your monthly spending. So, make sure to try one of the other methods before throwing in the towel.
Personally, we have tried every method and found we are most successful with our whiteboard.
Going off course with your budget is easily done when you’re not tracking your spending.
We have gone overbudget many times by trying to keep track of our spending in our heads. We finally learned how important it is to write it down as soon as the money is spent.
So, make sure to find a tracking method that works for you, be consistent, adjust your budget monthly, and make the changes you need to succeed. This way, you can stay on budget and financially independent.