Level 3: Tracking My Expenses

Level 3: Track Your Expenses

The What, When, Who, How and Why of tracking your expensesThis post describes how I started tracking my expenses and what tricks I used. If you’d like to read more about the task itself, have a look at Step 3: Track your Expenses where I describe the procedure in more detail.

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After making some initial progress towards Financial Independence and after having remained on level 2 of the process for a while trying to identify my goals of this mission, I am ready to move on to the next level of this journey: starting the third step and registering all of my expenses.

I know that having a list of all my expenses will be an invaluable resource during many stages of this mission, as many of the steps will rely on a detailed insight of what comes in and what goes out every month, so I am totally committed to start keeping track of everything that happens with my money.

The infographic on the right tells you more about which factors to consider when registering your expenses.

What

I’ll be registering all my cash, credit card, debit card, transfers, standing orders and other payments from my checkings and savings accounts as well as any payments from the joints accounts I have with my husband.

When 

I am going to try to register any expenses in the moment as much as possible, but of course I know there will be times I’ll forget and I have certain payments automated, so I’ve decided to take 5 minutes at the end of each day to check I’ve registered everything, by looking through my wallet for receipts and logging into my checkings accounts. My savings account I’ll check just once a week as I know that currently only has 2 movements a month: when I get my interest and when my automatic transfer gets in. In this way I know I am least likely to miss out on any. I have a reminder in my bullet journey to make sure I do this every evening.

Who

My husband is sooo not going to register his expenses so I know there’s no point insisting. He has his own individual accounts that he is of course responsible for so I won’t get involved in that or ask him to track his expenses, but for our joint accounts I will keep track of things. Where possible I’ll ask him to pass on receipts but I’ll probably just log into our account daily to check what’s happened and to ask him in the moment if I need to know more about a particular expense.

How

I have tried different options to log my expenses and I have in the end decided to go for YNAB – short for You Need A Budget. I love it as it is a relatively easy to use programme and it also has several more advanced features that you can decide to start looking into more once you get the hang of the programme. YNAB can be used both online on your computer as well as by downloading its app and that for me is a key necessity as I’d like to be able to insert expenses both on to go in the moment as well as when I am sat at my desk.

Of course if you’d rather stick with paper and pen option that is no problem either and the advantage there is of course that you don’t need any type of technology to keep up your new habit.

Other alternatives include using a digital programme such as Microsoft Excel or Mac’s Numbers to track your money as well as other apps widely available – just search for them and see which one you like best.

Why
My own main why is that I want to gain insight into my spending pattern so I can identify where I can save money in order to boost my savings for long-term goals I have, the most obvious one being reaching Financial Independence of course.

These are my own 5 key strategies to tracking my expenses. If you aren’t already tracking your own expenses, make sure to start today and read up about it in the detailed explanation in step 3: Track Your Expenses.

Step 3 Infographic: Tracking Your Expenses

The third step of the 100 steps to Financial Independence is focussed on tracking your expenses. You can read all about the how’s of this step in the detailed guideline or read about how I implemented this step and started tracking my own expenses.

Below in an infographic that will help you with the 5 key questions related to tracking your expenses.

The What, When, Who, How and Why of tracking your expenses

Start tracking your own expenses today by using the checklist here to help you get started.

Step 3: Track your expenses

Step 3 of the 100 Steps to Financial Independence
Step 3: Track your Expenses

This post describes the details of tracking your expenses on your journey to Financial Independence. To see how I personally started tracking my money, check out the from level 2 to level 3 post: Tracking my expenses, which includes practical ideas on what, when and how to start this new habit. 

Now that you have your goals clear of where you would like to get to financially, we are first going to look at what happens to your money and how you are spending it. Once you know what your current spending patterns are, you can evaluate whether they align with your financial goals and whether you need to set aside more or less money for your goals.The What, When, Who, How and Why of tracking your expenses

Obviously your spending changes from week to week and month to month as you don’t always need new clothes, a car that needs fixed and even your weekly shopping bill is different every time you go to the supermarket. Therefore, in order to find out where your money goes, you are going to track your spending. By registering your expenses you are furthermore becoming more conscious of spending your money, which is likely to result in a slight decrease in your expenditure in general. 🙂

There are various tracking options available. There is the good old notebook that you can carry around with you to register all your expenses in, but there are also (paid and free) online options and apps, such as YNAB (You Need a Budget), Mint and EveryDollar. You could also create your own spreadsheet in a programme such as Microsoft Excel. The advantage of the online programmes / apps is that they will allow you to plunk in any expense at the very moment that you are making a payment and some allow you to import your bank statement too. They can often give you reports depending on how you’ve set up categories, so have a look around and decide what you prefer and what you feel works best for you. That said, don’t use “having to find the best option” as an excuse not to start. If you don’t have time to investigate the options today, just start registering your expenses on paper and transfer them once you’ve made a decision on your definitive method of tracking.

Step 3 – Track your expenses – in detail

  • Starting today, keep track of everything that you spend, no matter how small or insignificant the expense might seem. This is not just cash, remember to also include any debit or credit card payments, standing orders and any other form of payment.
  • Record your expenses in one place, don’t worry about whether or not it is the perfect system and whether it is set up in the best way possible. The most important thing for now is to just start and then with time find out what system works for you.
  • When you get a chance, investigate alternatives to register your expenses, be that digital or in analogue format. Remember that if you want to use a digital expenses tracker on different devices, such as your computer, tablet and / or phone, you’ll want to make sure that it works on all of them and that any updates get synced automatically.
  • Settle for an option that you feel is easy to use and that fits in with what works for you. If you choose a system that you don’t feel motivated to use, you are unlikely to update it and you will most likely stop tracking your expenses after just a few days.
  • Log your expenses for at least three months, although it is a good habit to keep up in general even after these initial months, to see how your expense patterns change with time and to keep track of your money in general. Especially yearly expenses and emergency expenses might otherwise not become clear.
  • Add this step to a post-it, card, your mobile phone or journal, so you are reminded of your new task. You might also want to set yourself an alarm to remind you to write down your expenses twice a day to do it there and then, as if you leave it until the next day, you are likely to forget some of them.

If you ever forget to register an expense, don’t worry and most importantly: don’t give up on this entire step. Just accept that you forgot and continue again the next day. It requires quite a bit of time to get used to this new habit to keep a record of everything you spend, so it is likely you will forget now and again. That’s okay, just keep going!Obviously your spending changes from week to week and month to month as you don’t always need new clothes, a car that needs fixed and even your weekly shopping bill is different every time you go to the supermarket. Therefore, in order to find out where your money goes, you are going to track your spending. By registering your expenses you are furthermore becoming more conscious of spending your money, which is likely to result in a slight decrease in your expenditure in general. 🙂

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