Last Updated on May 3, 2024 by
Should you track your spending? How should it be done? One time, I asked a friend how much she spends on a monthly basis. Given that she is still in school, you would think I would give her a pass for not knowing. Regardless of what stage you are in life. You should have a good grasp of how much you actually spend on a monthly basis, ergo, your daily spending should be documented. Now do I do this consistently? .. ehhm No.. But wait… I want to change.
This is an AA meeting but for people with bad money habits. Hi, my name is Ibukun, and I am not good at tracking my daily expenses. I mean, I do a bit of tracking. From a bird’s eye view, I am aware of how much I typically spend every month. You see, that tiny 2k here, that slippery 3k there, all needs to be documented and accounted for; ergo, the devil is in the detail. Seems someone just learned a new word. Yes! Is it your learning? I can’t believe I haven’t been using it all this while.
Spending Wrapped!
My Spotify wrap was tagged “Vampire”; ergo, my most listened songs are dark and melancholy songs (I promise I won’t use the word ergo again). What can I say? I love songs that draw out my emotions. I invite you to join me in a #SpendingWrappedChallenge. Suppose you have a spreadsheet telling you the exact amount. In that case, you’ve spent the past year eating out or transporting or anything, and most importantly, cut down spending that is not necessary.
1. Automatic Tracking: Tech for You
Keeping track of your spending is crucial for managing your finances well. It helps you see where your money goes and gives you the power to make intelligent choices about your money. Whether working towards a big goal, paying off debt, or just trying to improve your financial habits, tracking your spending is key! This is where budgeting apps come in.
The most crucial component of budgeting apps is access – access to your bank details. With this, you will fully utilize its power. Some apps offer features such as expense categorization, transaction monitoring, and customizable budgets to suit your financial goals.
- Piggy Vest: With PiggyVest, you can easily keep track of your spending by setting budgets for specific categories like groceries, transportation, and entertainment. Get notifications when you’re getting close to your limits so you can stay on track with your financial goals! Its expense tracking feature. It allows users to gain insights into their spending habits, identify areas to cut back, and make informed financial decisions.
- You Need A Budget (YNAB): YNAB has a unique way of helping you budget by encouraging users to assign every dollar (or, in this case, Naira) a job by budgeting it into different categories. Basically, YNAB modernized the envelope system (more on that later). This budgeting technique ensures that you cover all aspects of your finances, allowing you to manage your spending wisely.
- Personal Capital: Personal Capital is more than just a budgeting app—it’s a comprehensive financial management tool that offers investment tracking, retirement planning, and wealth management services in addition to budgeting features. With Personal Capital, you can track your spending across all your accounts, analyze your investment portfolio, and plan for the future, all in one convenient platform.
2. Manual Tracking
While budgeting apps are handy and automated, some folks might lean towards a more involved method to monitor their spending. Manual tracking, which entails jotting down each expense by hand. A notebook, spreadsheet, or dedicated expense tracker, can be a game-changer when tracking. Yes, it demands more effort compared to using an app. However, manual tracking can really open your eyes to your spending patterns and encourage more mindful money management. Just like with any habit, consistency is key.
Keep a Spending Journal
Grab a small notebook or use a note-taking app on your phone to log every purchase you make throughout the day. Don’t forget to include the date, amount spent, and a quick description of the purchase. At the end of each week or month, take a peek at your spending journal to spot any trends and areas where you can scale back a bit. It’s all about taking small steps towards a healthier financial future!
Use a Spreadsheet
Create a simple spreadsheet in Excel or Google Sheets to track your expenses manually. You can find it here. List your expense categories (e.g., groceries, dining out, transportation) in the first column, and record your spending for each category in subsequent columns. Total your expenses at the end of each month to see where your money is going and identify areas for improvement.
Envelope System
The envelope system is a simple yet effective budgeting method that helps you manage your money in a straightforward way. It’s all about putting cash into specific envelopes for different spending categories. This helps you keep track of where your money is going and makes it easier to stay within your budget. Implementing the envelope system is easy – here’s how to get started:
- Determine Your Budget Categories: Start by identifying the key spending categories in your budget, such as groceries, dining out, entertainment, and transportation. Assign a specific amount of cash to each category based on your budget.
- Label and Fill Envelopes: Label individual envelopes with the name of each spending category and allocate the appropriate amount of cash to each envelope. For example, if your monthly grocery budget is $300, put $300 in cash in the “Groceries” envelope.
- Use Cash for Purchases: When you need to make a purchase within a budget category, use the cash from the corresponding envelope. Once an envelope is empty, you’ve reached your spending limit for that category until the next budgeting period.
By using the envelope system, you’ll be forced to prioritize your spending and make conscious decisions about where your money goes. It’s a tangible way to stay accountable to your budget and avoid overspending.
Concluding Remarks
In conclusion, tracking your spending doesn’t have to be complicated or time-consuming. By using budgeting apps, manual tracking methods, or the envelope system, you can gain insight into your spending habits, identify improvement areas, and control your financial future. Choose the method that works best for you and commit to tracking your spending consistently—you will be amazed at the positive impact it can have on your finances. Speaking about finances, read the following articles: