Keeping track of your monthly expenses is an important task that you should be doing frequently. It is amazing how quickly small monthly expenses add up and you end up wondering where all your money went!
Are you concerned that you are paying more than you need to for items or services because you don’t have a good system in place to keep track of your monthly expenses?
Determining what all of your expenses are can be time-consuming in the beginning but once done, you just have to add any new expenses or remove no longer existing expenses and everything else maintains itself. So it is definitely worth the pain at the beginning to potentially save money in the long term! Continue reading below for helpful tips to keep track of your monthly expenses.
How to Document Monthly Expenses
I have created a basic Monthly Expenses spreadsheet, which you can use to document all of your monthly expenses and calculate how much money (if any) you have leftover to save or invest.
The information in the first two columns are a few examples of expenses that you may have and are there to get you started. However, take some time to collect all of your typical monthly bills and add each of them to the spreadsheet, so that you can begin tracking your expenses immediately.
How to Properly Label Credit Card Purchases
Credit cards are used often for many different types of purchases each month. Due to this, it may be tempting to lump everything under the category “credit card”.
However, it is important to record all of the expenses from your credit card into more specific categories, such as groceries, gas for your car, eating out at a restaurant, etc….
This will allow you to truly track what you are spending per month on each category. For example, you may not have realized how much you were spending each month going out for dinner instead of cooking your own meals. If that was lumped under a credit card, you wouldn’t see the huge money-saving potential!
Why you should track when your next bill is due
On the spreadsheet, you will see a column labeled Expected Date. This has been included for three reasons:
1) For people who still receive their bills by mail, if you didn’t realize you should have been getting a bill that week and it got lost in the mail, you may end up paying late and incurring a late payment fee. Why pay out extra money for something that was preventable?!
2) While we hope that the companies who are collecting money from us are honest, there is a chance that you could receive a bill with the incorrect payment due date. You can catch these errors easily if you are tracking when you expect to have to pay that bill.
3) Finally, knowing well in advance when your bills are due allows you to plan appropriately and save your money to pay those bills.
Keep in mind that some bills are not paid on a monthly basis, you may only pay certain bills every 3 months or even once per year. Make note of that on the spreadsheet so that you don’t lose track of those bills. This can be accomplished by entering the expected date for that particular service.
What is Take Home Pay?
Your take-home pay is the amount that you actually receive for the month. After taxes and other fees have been taken out. This is so important because you don’t want to budget around money that you will never have. Review your pay stubs to determine what that value would be. Then enter that in the Total Take Home Pay box.
How Much Money You Spend Each Month
After all expenses have been recorded
- Add up to determine what the total expenses for the month were
- Then subtract that amount from your take home pay
Now you see a clear picture of where money is going and if you could add to your savings!
If your expenses are more than your take-home pay, you should evaluate where you could cut some expenses.
That is a quick way to begin tracking your expenses. Were there any bills that surprised you? Did any sneak up on you because you usually just use auto-pay and you had completely forgotten about them?
Sometimes it takes a few months before you fully capture all of your expenses. However, once everything is accounted for on your spreadsheet, you will have a quick way to view your financial situation at any given time and stay on top of those bills!
Head over to my post about keeping track of your bills and receipts. It will help to ensure that you pay them on time and don’t incur any late charges!