If you are looking to improve your relationship with money, one thing that you might want to focus on is making a personal or family budget and sticking to it! That’s easier said than done, but there are some very simple ways to improve the chances that you actually stick to the budget you set.
The primary way to do this is by carefully tracking your expenses. But how do you track your your spending? Here are some of the basic ways to do it.
Step 1: Create Your Budget
This might go without saying, but we’ll say it anyways. Setting a budget is the first step to tracking your expenses, and even if you exceed your budget in the first month or two, it’s okay because you are simply in a learning period.
Remember – a budget doesn’t control you, you control your budget. Keeping that in mind, there are three basic steps to setting up your budget.
- Write down your monthly income. This should be pretty straightforward. Even if you are a freelance employee, you can develop a solid range.
- Write down your monthly expenses. Start with things like foot and shelter, transportation, and clothing. Once those are taken care of, list other expenses such as entertainment, dining out, gym memberships or classic, cable and cell services, etc.
- Make sure your income minus your expenses equals zero. If your budget is in the red, you’r going to have to start trimming the fat and finding a way to reduce your expenses going forward.
Step 2: Record Your Expenses
Do it everyday. With everything you buy. When you make an expense, make sure to enter it into your tracking log and add up how much you have spent in that specific category to see how much you have left.
This is key when it comes to communicating with your spouse and family so that they take it seriously as well.
Step 3: Watch Your Amounts
Tracking your expenses to the T will help you make sure that you don’t overspend in any of your areas.
If you are married, make sure that both you and your spouse are recording all of the spending they do. During the entire process it is crucial that you make each other accountable and communicate with one another every step of the way.
Budgets can be made and destroyed by a lack of accountability and communication.
Why Should I Track My Expenses?
After going over how to track your expenses, chances are good you are interested in why it’s so valuable to do.
While simply making a good budget for yourself is a great start, it doesn’t mean much unless you are truly tracking your expenses and seeing how much you are spending. If you just do half the work, you’re likely going to continually create unrealistic budgets that you simply cannot hit.
Best Ways to Track Expenses
Pen and Paper
This is the old school system, but if it ain’t broke don’t fix it! The biggest benefit to this method is that you are physically writing things down keeps you and your brain engaged. It ensures that you will really be paying attention when you find that you are stretching yourself a bit too thin.
Why not take advantage of the digital programs at your fingertips. Plenty of people are now familiar with using spreadsheets on their computers and there’s a good reason why. The number of templates, the ability to customize your budget, and the ability to have your computer do the math for you is a great asset.
But, one downside to spreadsheets on your computer that you won’t run into if you are doing it longhand is that it might be hard for your spouse or partner to use and understand if they are not well-versed in the program you are using. It could get in the way of open communication, and as we previously discussed, that is very important when it comes to successfully sticking to your budget.
Another disadvantage to having your budget and expense tracking take place on your computer is that it makes it easier to avoid or forget about. We spend so much times on our computer already, it can be easy to want to just close it and not think about it when you return from a hard day of work.
If you’re looking for an expense tracker that can fit in your pocket, look no further than some of the great apps that have been built specifically to help you budget your life and plan for financially better future. Some of the best budgeting apps are as follows
- Mint: The market leader in budgeting management allows you to sync all your checking, savings, and credit card accounts so that you can see how much money is coming in and how much is going out.
- YNAB: This budgeting app helps you learn to live on the income that you made last month. While it is not free (there is a free 34 day trial and is free for students for a year), it can really help you learn about your past to better plan for your future.
- Pocket Guard: This is a barebones budgeting app with boils things down to help you better understand how much you have for spending. It helps account for bills, spending, and saving foals so that you can see how much money you have left in your pocket at the end of the month.