6 Ways To Track Your Spending

One of the issues I’ve always had with budgeting is that most budget reviews happen in hindsight after it’s too late to do anything about it. The challenge is finding a way to measure how you’re tracking against your budget without making it your new hobby. Here are six ways that I know of. (Hopefully, there’s at least one that you haven’t thought of before.)

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1. Track by store

I love to tell the story of my friend Jenny who texted me many years ago with a budgeting quandary. Her text went something like this:

“My husband and I have budgeted how much we want to spend on different categories like clothes, food, diapers, wine, etc. That’s easy to track when I buy clothes at a clothing store, food at the grocery store, wine at the liquor store, etc. But what about when I go to Target and buy all of those things? I don’t have time to break all that out!”

My answer: you need a Target budget. The purpose of a budget isn’t to dictate to the dollar exactly how much you’ll spend on each category (although I do have a friend, Doug, who does this right down to having a budget for bird seed and cat litter). It’s to give you guidelines to follow so that you can achieve your other savings goals without overdrawing your account. Rather than tracking categories, consider setting limits on what you’ll spend at each store you frequent.

2. Use a separate spending account

This is what I call the “lazy person’s” budget and is part of the way we do it. We have one checking account where all our bills are paid, including non-monthly things like condo association fees, life insurance and estimated taxes. We each contribute a set amount to this account each pay period, with the balance of our income going into separate checking accounts that we use for spending money. This way, we know that all the essentials will always be taken care of and the money in the separate account is “fun money,” where we just dial it back on spending when the balance gets low.

3. Track as you go

This is the way I used to do it, when it was just me making spending decisions. I kept a spreadsheet checking register that plotted out all my known bills ahead of time, while also keeping a running tally of my credit card balance to ensure that I didn’t charge more than I could pay off each month. I still maintain this method to a certain extent to make sure that all our bills are accounted for and paid, although I no longer have to enter each and every charge into the “credit card balance due” cell.

4. Use an app

The most popular app I hear mentioned is Mint.com, which is free and connects to most of your accounts, allowing you to customize your budget and receive weekly alerts of your status. It’s a bit wonky at times (it labeled my nail salon as a liquor store, although I suppose they both fall in the same category of “do you really need to spend that?”) and my junk mail around personal loans and credit card offers jumped up suspiciously after signing up, but it’s easy to correct transactions that are incorrectly categorized and there are other dozens of options out there besides Mint. In fact, there are entire Facebook communities dedicated to picking apart the benefits and drawbacks of each, so I won’t get into those details, but if you want real-time updates on where your money is going, then an app may be your best method of tracking.

5. Try the envelope method

I first heard about the envelope method back in 2004 when a friend of mine told me she kept a “car expenses” envelope in her kitchen cupboard, where she and her husband each tucked a one hundred dollar bill each month toward future car issues and eventually a new car purchase when they needed one. When another friend mentioned her embarrassment at how much she spent on cabs each month after adding it up, I suggested she try this and it worked! Since the majority of her rides were due to poor time management that didn’t allow for public transportation use, I had her put the amount she thought was reasonable to splurge on cabs in an envelope and when the envelope was empty, she had to take the bus or the train. Likewise, my colleague Greg’s family uses this method to keep grocery spending in check for their family of six.

6. Download after the fact

If your concern isn’t so much making sure you’re not over-spending in the moment and more about just ensuring you’re not mindlessly indulging in certain areas, then try my husband’s method. This method is especially useful if you’re just getting started and have no idea where all your money is going.

Every month he downloads his transactions into a spreadsheet (most online banking and credit card sites allow you to do this), then sorts by merchant and starts adding a label to each one – date night, concerts, gas, fast food lunches, dry cleaning, etc. When we hold our monthly money dates, he gives an update if he thinks we’re going bananas in certain areas. My surprise category is always Starbucks.

There really is no right or wrong way to track your spending so try different ways until you find one that works for you and that you can stick with. It’s not about the tracking. It’s about making sure that you’re able to achieve your other goals while still living your life.

Kelley Long, Contributor

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