If you are serious about frugal living, retiring early, or simply managing your day-to-day finances, there is no better place to start than an expense tracker or a spending tracker. Both essentially mean the same thing and it is the most fundamental step towards your personal financial strength.

Why Use a Spending Tracker?

Most of the time you will find yourself left with the underwhelming feeling of not knowing where your hard-earned money disappeared to. You spend $20 here and $50 there and a week before the pay date, you are left wondering where the last month’s salary actually go into! This feeling can leave a very bitter taste in your soul and make you feel as if you are not earning enough, you are not rewarded enough for your work, or even that you are not in control of yourself.

There is an easy fix to this!

All you have to do is make it a habit to monitor your spending habits. Doing this in memory is nearly impossible and you will not be able to make fruitful decisions at the end of the day. So however daunting it may seem, you will have to jot down your expenses!

A Simple Way to Track Expenses

When writing down or updating a spreadsheet with your daily expenses, you may think to yourself “there are so many different types of expenses, and it is going to take me a few hours to update this!”

It doesn’t have to be..

All you have to do is categorize your expenses. For an example, every purchase related to food can go into ‘Grocery’ category. Your mobile bill, Wifi bill, cable bill and utility bills can go under ‘Monthly Bills’ or ‘Utilities.’

By categorizing your expenses, you would end up managing around 10 different categories only, which makes the data input a whole lot easy.

Customize to Fit Your Needs

Before breaking down the categories, sit back and think for 10 minutes on your regular spending habits. Are there any concern areas? Do you think you might be lacking control in a certain area? If so, take that specific expense as a separate category. This way you can keep a closer look at this particular cash outflow.

For an example, I personally believed I spend too much on my coffees. So I broke out coffee from ‘Grocery’ category and assigned a category as ‘Coffee’ on its own.

You can use the attached Excel template as a guideline to track your spending. Customize it the way you want and the way you see fit.

Download our Free Spending Tracker Excel Template

Analyzing Spending Tracker Results

So now you have done the hard work of recording your daily expenses, it is time to look back at them. This is the step where you reap the benefits of your hard work-hopefully!

Looking back at the numbers in each category, you will be able to understand your spending habits. With these numbers at hand, you will have to sit down and extrapolate your options.

Don’t limit your thinking when you hit an expense category such as ‘Room Rent,’ which is fundamentally a ‘fixed’ and a mandatory expense. But you need to think beyond this mental constraint, else your second coffee for the day also becomes a ‘mandatory.’

Think of different places where rent could be cheaper. Think of going for a mortgage and getting your own house. Who knows, maybe the mortgage premium could be less than your rent!

Cutting Down on ‘Unnecessary’ Expenses

The word “unnecessary” is put within quotes because the definition of this can vary from person to person and situation to situation. But if you do figure out an expense that you could do without, it just needs to go. It may take a day, week or a month, but it needs to go. Not because I’m telling you, but because you deemed it ‘unnecessary.’

Always keep the end goal in your mind when you deal with your finances–financial freedom!

Using Our Free Expense Tracker

This is a very simple and easy-to-use tracker to monitor your expenses and incomes. Granted there will not be many revenue streams, but it is good to have a track of it too.

In this free template, you will need to update the ‘Income Tracking’ and Expense Tracking’ sheets. ‘Month’ column is important to update the ‘Summary’ tab automatically.

• ‘Month’ column – update the month of your spending/income
• ‘Date’ column – specific date on which the expense/income occurred
• ‘Expense Type’ column – you can define these categories as you wish (but make sure to have the same categories in column G)
• ‘Expense’ column – the amount you spent
• Same rules apply for updating the ‘Income Tracking’ sheet.

Download our Free Spending Tracker Excel Template

Let us know your feedback on the tracking tool and any improvements you think it requires.