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You’ve created a budget, but how do you stick to it?
Simple. You track your spending.
Every dollar you spend should be accounted for, so you can make sure you stay within the limits of the budget you worked so hard on.
Tracking your spending means recording every single transaction you make. This applies whether you use the cash envelope method of budgeting or if you just use your debit card for all your purchases.
This may sound like a lot of work, but once you’re following a budget, you shouldn’t be spending so much money that you can’t keep track of it. Make it a habit of recording your transactions each time you get home from the store or buy something online.
In this post, I’ll show you three different methods you can use to track your spending:
- Pencil and paper
- Excel spreadsheet
- Online service with mobile app
Choose the one that works best for you.
Method 1: Pencil & Paper
If you prefer to budget manually, you can still track how much you spend. Use a special binder or notebook just for budgeting and tracking to keep things organized.
After you’ve created a budget, list each individual purchase you make next to the category, adding them up as you go.
My Monthly Budget Tracker (pictured above) has room for up to five expenditures per category per month, and includes columns for tracking amount spent and remaining. Use a pencil so you can make changes to these columns throughout the month.
You can easily create a similar tracker for yourself on regular notebook paper if you’d rather not print one. The important thing is to track every purchase and watch your budget to make sure you don’t go over.
Method 2: Excel Spreadsheet
You might find that Excel works better for tracking than using a pen and paper. A spreadsheet is easier to edit and fix if you make mistakes, and it can be programmed to do the math for you.
If you don’t have Microsoft Excel (and don’t want to buy it), you can download Open Office for free. It’s a complete Office Suite like Microsoft Office, but it doesn’t cost a dime.
Here’s a look at my Budget Tracker Spreadsheet. There are quite a few budget spreadsheets out there, but I couldn’t find a good one that allowed you to track expenditures per category. I created this one to use for myself and I’m offering it to you for free. Click here to see a short video tutorial.
It allows you to track eight different expenditures per category per month, and it’s easy to customize for your personal budget. It uses the zero-based budget logic, which means that every penny of your income is budgeted and tracked.
Method 3: Track Your Spending Online
Perhaps the easiest and most convenient way to track your spending is to use one of the many popular apps available.
The three most popular budgeting apps are YNAB, Mint, and Every Dollar. Here’s a rundown of each one to help you compare:
You Need a Budget (YNAB) is my favorite budget tracking app. I personally use a combination of YNAB and a spreadsheet to budget and track my own spending. These features make it the best:
- Continuously syncs data on all devices, so partners can share an account and stay on budget
- Imports your checking account data
- Provides charts and graphs that visually represent your spending
- Tracks debt and allows you to create saving goals
- Includes free, live workshops on budgeting and money management
- Supports scheduled recurring transactions (subscriptions, cell phone bills, etc.)
YNAB costs $6.99 per month, but you can try it for free for 34 days. They also offer one year free for students.
I think it’s worth the price. According to the website, new budgeters save an average of $600 by month two and more than $6,000 the first year of using the program. There’s a 100% money-back guarantee.
Every Dollar is the budget tracker created by Dave Ramsey’s company. There’s a free version and a paid version called Every Dollar Plus.
Both versions have some good features, but I personally think YNAB is better if you’re willing to pay for a service. Here’s an overview of the free version:
- Works with zero-based budgeting
- Syncs to a smart phone app so you can access your budget anywhere
- Provides helpful visuals for what’s planned, spent, and remaining
- Tracks debt and savings goals
The paid version has a few more perks:
- Connects to your bank account for faster expense tracking
- View your account balances from within the program
- Coaching calls and call-back support
Overall, I think Every Dollar is a good service, but it’s not as robust as YNAB and some features are more difficult to use (such as moving between categories). There’s a free trial of the Plus version available to free users, so you can try it out before you upgrade.
Mint is a completely free alternative to YNAB and Every Dollar, but it can be overly complicated if you just want to budget and track your spending. The app is produced by the makers of Quickbooks and TurboTax. Here are some features of Mint:
- Tracks your bills and offers a bill-pay service
- Links with your bank accounts and credit cards
- Provides a free credit score
- Allows you to track investments
- Syncs to a smart phone app
- Automatically updates and categorizes your transactions*
*This feature was what I liked least about Mint. I prefer to manually categorize my transactions and I found it tedious to have to fix the categories constantly because Mint doesn’t understand my method.
It’s a free service, so you’ve got nothing to lose by giving it a try.
Start Tracking Your Spending
So there you have it. Three different methods varying in sophistication. Whether you prefer to write everything on paper or record it all electronically, there’s no excuse for you to put it off any longer.
Get out there and start tracking your spending right now! The sooner you start, the sooner you’ll be making smarter financial decisions.
Do you have a favorite tracking method you’d like to share? Leave a comment below!
More Posts in the Personal Finance 101 Series
This is the second post in my Personal Finance 101 Series. See the following posts for parts one, three, and four:
How to Create a Budget – (Part One) Learn how to create a budget so you can get out of debt and save more money for the things you want. This is my personal budgeting method and I’ve used it for many years with success. Don’t put it off any longer. Take back control of your finances!
How to Save Money – (Part Three) Saving money doesn’t come naturally to everyone. My natural inclination is to spend, and I had teach myself how to save. After quite a few failures, I finally figured out what works. In this post, I’ll show you how to save money for emergencies, retirement, and all the other fun stuff you want.
How to Pay Off Debt – (Part Four) Are you ready to pay off the debt that’s been holding you back? With a good repayment plan and some self-discipline, you can be debt-free faster than you think. Learn how to face your debt, set attainable goals, and create a repayment plan that works with your budget.