How To: Track Your Personal Finances

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If you don’t know where you started or where you are going, you have no clear path to follow.

The path to achieving your financial goals begins with understanding your financial starting point.

How many of these questions can you answer?

On average, how much money do you spend every month?
Exactly how much money do you bring in every month?
How much money are you saving?
What do you spend the most money on every month?
How much do you spend on groceries every month?
How much do you spend on eating out and entertainment?
What automatic payments and subscriptions do you have?
What is the balance on every credit card you have and what is the interest rate for each?

If you don’t have a clear answer to ALL of these questions, it may be time to learn how to track your personal finances. You will not make financial progress if you don’t know where you are right now.

Once you identify your spending categories and the areas that need improvement, you can start a budget and take control of your spending. You can build your roadmap to make progress and have a system in place to monitor and track your progress. Then you can watch your savings (and your wealth) grow.

Let’s take a look at how to go about answering these questions by reviewing 4 ways to track your finances.

Option 1: Use a spreadsheet and add every expense over the last 30 days (or pick the last monthly statement)

Review bank statements for every account you use for monthly expenses.
If you use cash sometimes and don’t know where that cash went, include atm withdrawals on your spreadsheet. Over the next 30 days, keep cash receipts so that you can fine tune this category later.
Divide your spreadsheet into spending categories.
I have included a simple spreadsheet template that has served me well for years but there are also many online tools that are much fancier than mine. Income and Expense Tracking Worksheet.
There is even a google expense form that you can use through your google account.
If you are a numbers person, use red for total money out and blue for total money in for every category. Then take the grand total of your income and subtract your total spending. Take note of the total in each category. Are there any surprises?
If you are a visual person, generate a pie chart using your categories and spending amounts. This will really help you visualize your biggest expenses.

To make this process easier, I created an expense tracking worksheet.This is especially helpful for referring back to common expenses or if you prefer using pen and paper to keep track of your spending.

TIP: Keep an Expense Journal

If you like to journal, keep a journal with you and write down everything you spend money on, as you spend it. This will help you track your spending habits and increase your overall spending awareness, which will lead to better choices. After a few months of tracking you’d be amazed just how much your money mindset can shift and you will begin saving more.

This is a great budgeting planner / journal that includes pages to set your goals then track your expenses and debts. Since it’s nice and compact, you can keep it with you as you develop the habit of tracking your spending. For a hands on approach, this can be extremely effective in transitioning you from paycheck-to-paycheck financial hot mess to money managing queen.

Option 2: Utilize Financial Tracking Through Your Bank

If your bank offers an online platform for managing accounts:

Check if they offer expense tracking software. If they do, utilize this! I have USAA and they have AMAZING online tools to review every aspect of spending.
Start with your main checking account. Go through every item on your statement and assign an expense/income category. They should have already tried to assign the correct category, but you’ll need to check each one and assign new categories as needed. For example, I use my debit card for the gas station near my house. When I first started checking this expense in my online account, the category assigned this purchase was always “Uncategorized”. So I added a new default setting such that every time a purchase was made at this gas station address, the category would default to “gasoline/fuel”.
Once you have assigned the correct categories to each expense and income item in your account, you are ready to use the expense tracking tool. This is the fun part!
This will take your income and all your expenses and tell you whether you net positive or negative for the time period and break down all of your expenses into categories. Now you are ready to review each spending category and start thinking about your budget.

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How To: Track Your Personal Finances | FI & Wine (2)

Option 3: Use Online Tools to Track Your Finances

If your bank does not offer expense tracking software and you don’t like entering items on spreadsheets, there are numerous online websites and phone apps that will do this for you. Mint and Quicken are tried and trusted and there are new companies providing this service all the time.

Even if you choose a deluxe fee-based solution, the gains in financial awareness are well worth the expense. Your savings potential is huge, but you have to understand your spending first.

Option #4: Create your own free expense tracking app

If you’re looking for a more personalized option, you may want to just set up your own easy tracking system. And it’s easier than it sounds.

While I really like using Mint, and I finally have it personalized enough that it’s mostly on autopilot and all I have to do is open up the app on occasion and (obsessively) watch my net worth grow, I use my Google Forms app on the daily. This is the system that has been most effective for tracking joint expenses and figuring out the family budget and finances.

Learn how to do this atHow To Make Your Own Free Daily Expenses App. It only takes about 40 minutes to set up and play around with. And then, next time you splurge on that pumpkin spice latte, you can just open up your app on your smart phone’s home screen, enter in the amount, and off it goes to your budgeting spreadsheet. Correctly categorized and everything.

Recap

If you don’t know where you started or where you are going, you have no clear path to follow.

Whether you are in debt or already close to retirement, you need to know where you currently stand financially. You need to understand your spending habits and what they are actually costing you.

Once you have tracked your finances for a few months, you will have insight into what changes you need to start making.

If your finances need some cleaning up, this is your first step. Know your finances. Step two will be working out a budget and deciding where you want to go financially. But you won’t go far when you don’t know where you are right now.

To get an idea what your small spending habits may be costing you, check outThe True Cost of Your Morning Latte.

Action Steps

Pick an expense tracking method
Download the free Monthly Expense Tracking Workbook from the resource library.
Set aside some time and pull up your all your statements for the last month.
Start categorizing your income and expenses.
If you need some category ideas, visit150+ Expense Tracking Categories to Help You Track Your Finances
Run each item through one of the financial tracking methods listed above. This will give you a good idea of where you stand financially and what areas need improvement.
Over the next 30 days, continue to track your expenses and become familiar with your spending habits.
The next step will be creating your budget.

How To: Track Your Personal Finances | FI & Wine (2024)