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How Tracking Expenses Helps You Get Ahead

Contributed by Ruth-Anne Klassen

We all know that life is expensive, but do you know where your money is going? Maybe you find it difficult to budget, and you don’t know how to make grocery money last until the next paycheque. Tracking, or recording, expenses may be the first step to improving your finances. Read on to learn some financial benefits of tracking expenses.

Tracking expenses helps you to:

  1. Be aware of how much of your money is going where.

You know that you eat out multiple times a week, spending $10-15 at each meal, for example. However, keeping track of your restaurant spending may reveal that you spend $200 per month on eating out. If you empty your bank account before the next pay day, recording expenses helps you to know where that money is going.

  1. Make the right budget for yourself.

You might have heard that you should budget 10% of your income to food expenses. But in reality, you might spend that much in one week alone! If you record your spending for a few spending periods*, you’ll see your normal spending on necessities like rent and groceries, and pleasures like restaurants and extra clothing. Given that estimate of your normal spending, you can budget to spend less. In the food example, you may plan to eat more homemade meals, or cook meatless dishes. When your budget meets both your needs and wants, it will be an easier to stick to it.

  1. Provide a real-time spending update.

Throughout each spending period*, there will be chances to make decisions about what to spend money on. By expense-tracking, you see that you’ve already spent 90% of your restaurant budget by the end of week 2. If you don’t want to run of money this time, you might choose to spend less until your next budget period. The more you practice this, the easier it becomes!

*Some people like to record expenses and budget for each month, while others prefer to do so for each pay period, or each week. It is important to do what works best for you!

 

Supplies to start tracking

  • Records of your spending, such as:
  • Receipts from stores, on paper or in email
  • Bank/credit card statements, on paper or in online bank account
  • Hand-written records of how much you spend at each transaction
  • Any physical paper or digital “container” for your records, such as:
  • A calendar, with expenses recorded, for example, on the monthly calendar and totals tallied in the side margins
  • A notebook
  • Printable worksheets
  • Excel, which may even offer free templates for expense-tracking and budgeting
  • An app such as Mint or Goodbudget (both free!), which remember your expenses and your budgeting goals

Types of expenses

Here are some categories that could appear when you start tracking:

  • Housing: Rent or mortgage, condo fees, renter’s or home owner’s insurance, repairs
  • Transportation: vehicle payment, insurance, registration, maintenance, fuel, transit pass or tickets, taxi fares
  • Food: groceries, restaurants, meal or grocery delivery
  • Schooling: Tuition, textbooks, school fees
  • Subscriptions: Streaming services, grocery delivery
  • Savings: Emergency, children’s education, down payment of a home

Get tips on how to budget and cash rewards for saving money, every month. Join the Momentum Savings Challenge. Learn more here.

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