How To Track Expenses

Luke 14:28

Why Track Expenses?
Many people know how to track expenses, or at least know that they ought to be tracking their expenses, but don't want to take the time and effort to do so. I have talked with many people who say that they don't need to track their expenses because they "know" how much goes where. However, if you are not tracking your expenses, you cannot know exactly where all of your money is going and therefore you cannot make intelligent, reasoned, fact-based spending decisions. You also cannot maximize your savings and investing dollars.


An Easy Way
Here is a very easy way that I have used to track my expenses. I like to share this when people ask me how to track expenses. I get a small notebook that will fit in my shirt pocket. On the top of each page I will write one of my categories, i.e. housing, food, entertainment, etc. (See how to make a budget for more information on categories.)

Record Your Purchases
When I make a purchase, I will record the date of the purchase, a general statement about what was bought and the amount of the purchase. I also have a paperclip attached to the front cover of the notebook. I will attach any receipts that I get with the paperclip and file the receipts when I get home.

Works For Every Purchase
I like this method because I can pay in any format I choose. If my mortgage is automatically withdrawn from my bank account, I record the withdrawl in my notebook under housing. If I stop at the gas station and buy gas with my credit card, I record the charge in my notebook under transportation. If I stop off at my favorite coffee shop and use cash to buy a coffee, I record the purchase in my notebook under entertainment.

(That coffee would be an entertainment expense for me. That same purchase could be a food expense for you if you budgeted it that way.)

If I stop at the grocery store on the way home from work and pay with a check, I write that purchase in my notebook under food.

I Know Where My Money Went
The way that I pay doesn't matter. What matters is that some of my money went somewhere and when I record those purchases. I know exactly how much and where my money was spent. At the end of the month I can easily tally my categories and see where all my money went that month.

Software Works
Another easy way to track your expenses, if you have money management software like Quicken from Intuit or Money Map Software from Crown Financial Ministries, is to collect your receipts and put them in a small box or basket next to the computer. Then, once a day, or maybe once every other day, you record your expenses in your money management software. Recording your purchases doesn't take long to do when you keep up with it on a daily or every other day basis. When you are not diligent in keeping up with recording your expenses and only record your expenses sporadically the task becomes daunting, mistakes are made and receipts are lost.

Diligence Counts
How you track your expenses doesn't really matter. Use the notebook or money management software, use an accounting ledger or the back of a brown paper bag. It is not about which budgeting tools you use. The point is to get in the habit of tracking your expenditures in a way that fits your lifestyle most comfortably.

Stop Wondering Where Your Money Went
When you know how to track expenses, making a budget becomes a whole lot easier. You can see exactly how much and where your hard-earned income is going. Your spending patterns are a whole lot easier to see when your purchases are recorded. You can also see if any of your categories, like your entertainment or miscellaneous categories, are consuming more of your resources than they should. Whether you are creating a household budget for the entire family or you just want to make a personal budget for your own spending, you need to know and understand your spending habits before you can intelligently decide to change your habits or keep them.

I am fairly confident that when you learn how to track expenses and see the results that comes from accurately tracking your expenses and categorizing them, you will be astounded at some of the things you learn. If you are like me, you will want to share with all your neighbors and workmates how to track their expenses and help get them on the path to real financial freedom.

Biblical Personal Budgeting Homepage from How To Track Expenses

How to Make a Budget from How To Track Expenses