How to Track Your Expenses in 4 Steps

Tracking your expenses isn’t difficult — it’s a habit. And just like all habits (yes, even the bad ones), the more you do it, the more natural it becomes and the less likely you are to forget to do it.

Tracking your expenses is incredibly useful because it holds you accountable for your finances. When you know how much you’re spending in a given category (groceries and transportation, for example), you’ll know whether you need to cut back. Likewise, if you’ve underspent, you might want to allocate more money to your debt repayment or savings.

Tracking your expenses can also reveal any spending issues as you become more aware of your spending habits. It’ll become easier to recognise negative spending behaviours and take steps to change them. For example, you may realise that you’re spending way too much on rent and should consider moving to something within your means.

Here’s how to get started in four steps:

Step 1: Check your account statements

First, you need to get a sense of your monthly cash flow.

Dig through all your bank account statements, e-wallet transaction histories, and bills/receipts, then note down every single thing that you’ve spent on.

Be honest with yourself! Doing so will help you to identify where your money has gone.

Step 2: Categorise your expenses

Now that you know what you spend on, it’s time to group your expenses into categories.

Anything essential to the function of your life (no, your Netflix subscription isn’t included 🙈), will fall under Fixed Expenses. These are things like rent/mortgage, insurance, doctor visits, pet food (if you have a furry friend!), and basic groceries.

Everything else that’s nice to have but you could live without falls under the Wants category.

You can further group these expenses into subcategories, such as Beauty (hair salon visits, massages), Shopping (new clothes, phone upgrade), Subscriptions (this is where Netflix falls under), and Entertainment (movie tickets, Friday night drinks, etc.)

Step 3: Record your expenses

Tracking your expenses and budgeting go hand in hand. If you don’t have a budget already, learn how to create one here.

Decide how you would like to record your expenses. Some people prefer to write it down with good old pen and paper, some prefer a spreadsheet, and many enjoy the convenience of an expense tracking app.

The BigPay app, for example, has an in-built feature that automatically tracks all expenses from your BigPay card.

The important thing is to set a regular rhythm for tracking. For some, that may be at the end of the day or the end of a week. For others, it may be as soon as they’ve spent money, so they don’t forget about it.

Whatever works for you, just as long as you record it.

Step 4: Continuously review your budget

With the data you collect from tracking your expenses, you should be able to spot patterns in your spending habits.

For instance, do you tend to go online shopping when it’s late at night? Maybe you tend to overspend on food and drinks when you’re with your peers. Or perhaps you tend to spend too much on groceries because you don’t plan your meals for the week.

As you track, be ready to make room for adjustments in your budget. You may find that the original budget you had set is unrealistic, or you may need to cut back in one category to make room for more in another.

Take the time every month to adjust next month’s budget as you gather more data, to make it work best for you.

The Bottom Line

Although the initial stages of tracking your expenses may be cumbersome (and let’s face it, confronting), it’ll become second nature in no time, just like brushing your teeth.

Tracking your expenses and making it work with your budget will put you on the right track to reaching your financial goals. Your future self will thank you!

Tune into the BigPay blog every week to improve your financial knowledge.