There are an unlimited number of ways one can keep track of expenses. Some prefer Microsoft Excel (me!), others use QuickBooks, phone applications like Mint, or good ole’ fashioned pen and paper to balance a checkbook (I actually keep a notebook to track basic cash flow, but more on that in another post).
An expense tracker is really a direct reflection of how you structured your budget. In fact, the template may be one and the same.
In order to create the tracker, you will first need to identify how you will categorize your spending. Below, are the categories I currently use and some of the key items or expenses that would fall within each. Some are recurring, some are not.
It doesn’t matter which categories you choose, or even how many you choose, but I would suggest that you stick with your primary categories once selected, for the duration of the year. Tracking can become unorganized and difficult to manage if the way you are outlining your budget and tracking your expenses is constantly changing. The numbers will become confusing; identifying trend lines or creating graphs as a visual aid (for those so inclined) even more so.
What’s most important is not the way the tracker looks, but rather, the way in which you track. Naturally, there are many ways to do this as well. Students of Dave Ramsey might deploy the envelope method, by taking out cash at the beginning of the month, placing a preselected amount in several envelopes, each representing a category of spending. That way, you can’t spend more than what you have allotted. Others might set the budget and let an iPhone application update them in real-time on their spending in each category as the month progresses.
Find what works for you. It may take some trial and error…(My process has evolved over time).
Finally, have some fun with it. It can be a major stress reliever to better organize this aspect of your finances.