Tracking Your Personal Expenses and Creating a Budget

Tracking Your Personal Expenses & Creating A Budget

Tracking Our Expenses

For the new year, my partner and I created a spreadsheet for tracking everything we spend. Our aim is to create more awareness about where our money is going, and spend less than we have been.
I used to meticulously track my spending years ago, but we've never implemented it together. Instead, we've been using Mint for the past few years, which automatically tracks spending in different categories, but it doesn't do the job very well. Mint can be nice for having a record of expenses, and it does a fair job of categorizing each line item. However, it often loses communication with our various accounts and we have to go through and reconfirm passwords so frequently that it's a bit of a nuisance.

Money Mindfulness

But the biggest issue with Mint, I'm realizing, is the fact that the tracking is automated. While automation sounds handy, taking the work out of tracking your own expenses means you have that much less awareness, and that much less mindfulness, of where your money is going.

Entering every purchase into the spreadsheet manually really changes how I think about each expenditure. I'm excited about how this awareness will change our habits. I'm already looking for more ways to not buy things! While we are barely into the new year and this new system, we are both looking at spending in a totally different way. It reminds me of how the simple act of keeping a food journal helps people improve their diet. Consciously tracking helps us subconsciously analyse (is that a thing?) our actions, and see if they're a good fit for how we want to be living.

The Spreadsheet

To set this up, all you need is a spreadsheet program, which we use through Google Docs for free. If you do a search for budget spreadsheets, you can get all sorts of ideas for the layout. Of course, you can track your expenses the old fashioned way, with pencil & paper, if that's what you're more comfortable with. However, spreadsheet programs like Excel and Google Sheets have some very handy functions that make calculating totals, averages, and differences a breeze, once you get comfortable with how to enter formulas.

Tracking Your Personal Expenses and Creating a Budget

Our budget is set up simply with the date in the first column, then the second column has a drop-down menu with different categories such as Mortgage, Food, Entertainment, Purchase, Car, and various utilities. The third column is the actual dollar amount spent, and this column is automatically added together under "Total", in the top right corner. The fourth column is a place where we can note a description of the line item, such as what the purchase was or where the income came from. Income will be entered as a negative number, which is counter-intuitive but we decided it would be easier to set it up this way since the majority of the entries will be expenses. So, we're hoping for a negative total at the end of each month, which will show how much we were able to save.

The Goal of Savings

With tracking, we can get more satisfaction out of not spending money, as well as really see where our money is going, rather than just having a vague idea. Once we know exactly how much of our income is going to certain areas, we can decide if that feels right for us, or if we need to rethink how we're spending.

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Thursday, January 4, 2018