Ask anybody, tracking and gathering data is the first step in taking control. This is not limited to finance, hence the “ask anybody” part. When it comes to predicting the weather, data is the crucial element. When it comes to COVID-19 vaccine development, virus data is the foundation. Be it a country’s economic policy, a company’s marketing campaign, be it your own personal finances, gathering data is the first step in asserting control over the subject.

All the financial gurus advise you on tracking your personal expenses as the first step towards financial freedom. Tracking expenses and financial freedom may seem like two ends of a very long bridge, but they are most definitely connected. Only if you know your past spending and income, can you plan and manage your future.

More knowledge = smarter and faster decisions.

So, an expense tracker comes in very handy to track your spending habits. There are a good dozen ways to do this. From expensive computer software to free mobile apps to building your own tracker on Microsoft Excel or if you want to go really old school, even writing things down manually in a book. Being the finance nerd I am, I choose an Excel tracker. And this is not without its merits either.

Advantages of building your own Expense Tracker

First and foremost, it is free to build your own expense tracker on Excel. Of course, you have to buy the Excel software, but chances are you already have it on your computer. At least, you don’t have to incur any additional costs to have your tracker going.

Secondly, I like creating Excel projects using formulas, charts, graphs, and the whole works. It also gives me great pleasure to see something come to be from the ground up.

Last but not least, the best thing about creating your own tracker is the freedom you get to personalize it 100% the way you want. You can have whatever you want and however you want them. Sometimes, third-party software can be very rigid to use and may not give you the outputs you want. Some are overly complex. Some are overly simple. Others don’t have the categories you want. You can avoid all these with a custom-built tracker.

With all merits being said, the only demerit is that you need to put some time into creating it and you need to have some basic Excel skills.

My Personal Finance Tracker

Here onward, I will show different areas of my expense tracker that I built and maintain on Microsoft Excel.

My expense tracker is not just limited to tracking expenses, but also tracks incomes. This is merely to get a net of my incomes and expenses. Also, because I have multiple income streams that I like to keep track of. Let’s face it, improving the income is the target in the first place. If not, we look at managing expenses.

Expense Tracker

In my expense tracker, I have 15 categories of expenses that I felt like I need to keep tabs on. These are the decisions you can make to customize your tracker the way you want. I have categories for my major expenses such as room rent, car lease, traveling, clothing, groceries, and more, and some minor categories such as mobile bills, coffee, entertainment, and more. I also have a separate category for investments, which I treat as an expense for the time being.

I’ve had some unfortunate but one-time miscellaneous expenses that I have grouped in the ‘Administration’ category, hence why it is so high.

Income Tracker

On the income side, I have way fewer categories for obvious reasons. I would love to increase the number of categories which would mean an increase in the number of sources of income (I’m working towards this). Also, I couple up a few income sources that are related to one main source. For example; I couple advertising revenue, sponsored content revenue, and Amazon Affiliate incomes from my blog/s into one category called ‘Blog income.’ So far, some of these categories are so small that I don’t necessarily see a big advantage of separating these different sources.

After all this, I have one more page for a summary of the incomes and expenses and the net per month. This page is just to give me a snapshot of the results of the months. So, I have 2-3 cool-looking charts to please my eyes.

I also have a few more tabs in my tracker for retirement planning, a simple income tax calculation, a snapshot of my investments, and a budget vs actual tab to compare my incomes and expenses against a budget I did for myself. These are not developed to the level of perfection that I want them to be in to show here. So, maybe for another day.

Looking at these incomes and expenses, I am able to predict how much I can save and invest a year ahead. This allows me to calculate my retirement planning milestones. Looking at these numbers, now I can safely plan how much I can afford to invest into my dividend portfolio. If there is a major expense in the future, I can easily predict how long it will take me to save up for it or whether I need to adjust my expenses now to meet the future requirement.

There are so many benefits to tracking your expenses (and incomes). If you are on your FIRE journey, an expense tracker is a must.

Let us hear your success stories in tracking finances in the comments below.