My husband and I started to keep track of everything we spent in March 2004. I know some interesting figures, like the fact we have spent $16,800 eating out and $11,000 on gasoline for our cars in the last 5 ½ years, but who cares?
In and of itself, expense tracking didn’t revolutionize our financial situation. It wasn’t until we made a decision to get out of debt in June 2006 that our situation changed. But once we decided enough is enough with living beyond our means, then tracking and reviewing our expenses became a key to our success.
The first month we got serious about living within our means we looked back at the hard cold facts of our spending in the previous months. We could see areas that seemed out of whack and we also identified expenses we might not have otherwise planned for, like I discussed in When Your Budget Deceives You.
Once we started our journey to reduce expense and realize those savings against our debt, we monitored our spending every month. We looked at where our money went. The numbers kept us honest and accountable to our theoretical spending plan. It isn’t what we plan on paper that changes our life. It is what we actually do that matters. That’s why we had to look at what spending choices we actually made.
I fully recognize that there are two types of people reading this post. Those Type A detail mongers that are energized by the thought of data and details about where their money is going. The rest of you are groaning at the thought of getting organized enough to know where your money is going. I have suggestions to help both of you.
How Type B People Can Track Expense
If the thought of all this detail is overwhelming, then here’s a low-key, low-tech, not very precise way to understand your expenses. You will miss out on tracking them over time with this approach, but you will at least gain a month-to-month perspective on your priorities.
Here’s how to do it:
- Make a purchase.
- Keep the receipt. You’ll have to get in the habit of asking for a receipt everywhere you go, for every purchase.
- Put all the receipts in a box or envelope
- At the end of the month sort the receipts on your kitchen table by category
- As you handle all your receipts again and notice which categories have bigger stacks than others, take note of areas that seem out of control and things you are spending money on, but may not be included in your spending plan.
The upside of this non-scientific, non-number focused approach is that it’s so simple you can actually do it. As they say, “do something lest you do nothing.” The downside remains though, that you won’t have month-to-month comparisons to understand whether your expenses are going up or down in a particular area.
Keep reading about the detailed approach for Type A folks and maybe, just maybe you can find a middle ground that works for you.
How Type A People Can Track Expense
For those that love details and love the computer, tracking expense will be easy for you:
- Make a purchase.
- Keep the receipt. You’ll have to get in the habit of asking for a receipt everywhere you go, for
- Enter and categorize your expenses using a computer program
- Review your expenses by category
I make that sound pretty easy, don’t I? You can feel free to buy software like Quicken or Microsoft Money to do help you do this. I didn’t want to spend the money on it so I made my own system in Excel.
Carrie Rocha’s Expense Tracking in Excel
KARE 11, the NBC affiliate in Minneapolis, featured me in a story called Getting Yourself out of Debt, and highlighted my homemade financial tracking worksheet. Let me explain the expense tracking portion of it. (It also contains a cash flow portion, which I’ll explain next week)
First I created a worksheet called “Expense register” in Excel. Think of it sort of like a checkbook register. I labeled and used the columns as follows:
Check #. I use this as appropriate
Month. I enter the month as 11-Nov, 12-Dec, etc. to make it easy to aggregate expenses by month.
Date. This is the exact date of the purchase (or the date it cleared the bank if I don’t know the exact date of purchase) in mm/dd/yy format.
Category. I’d encourage you to keep your categories broad enough that you end up with no more than about 10 or 12 for everything in your life. I’ll share my categories with you in a minute.
Pending Amount. Whether I write a check or use a debit card this is everything that has yet to clear the bank.
Cleared Amount. I move the pending amount into this column when it clears the bank or if I pay cash I enter that expense right into this column.
Other amount. I use this column when I have scheduled a bill to be paid online a few weeks from now. I put something here versus in the pending column when I know we’ll get paid again before the payment clears. If I put it in the pending column right now it will look like our account balance is low or even negative, but that’s not true because the payment isn’t going to happen for a few weeks yet.
Description. I typically put the place where we spent the money, but sometimes include a little more detail like what we bought or for whom. I think about what information will be useful for me to see and I include that.
Year. A four digit year. I use this field along with the Month field to look at how our expenses compare to the same month last year or the year before.
Here’s an example from my register:
Second, I create a Pivot Table on another worksheet in Excel to give me the month-to-month and year-to-year tracking numbers I like to see. I cannot explain exactly how to do a Pivot Table, but encourage you to use help within Excel or read this how-to make Pivot tables tutorial. Using the Pivot Table I can quickly and easily look at our expenses for any combination of categories, months and years.
Here’s an example from my own Expense Summary Pivot Table. It shows how much we have spent on Eating out and Gas each August through December since 2004.
If you spend any time looking at the actual numbers you can notice lots of things. Why are certain months so low? Why are others so high? Are we trending up, meaning an overall increase in expense month after month or are we trending down?
My husband and I would sit down at the end of each month to look at the numbers and then agree on adjustments we would want to implement the following month. This approach, one month at a time, got us out of $50,000 in debt in less than three years.
Your turn: What works for you and doesn’t work for you in your current approach to expense tracking?
Oh thank goodness I’m not the only one that invested the time into making up a spreadsheet. I do mine on a monthly basis and use a pivot table to make sure I’m on track weekly with my spending (so when I grocery shop I know my limit for the week based on where I’m at for the month.) I was just thinking this morning (as I was reading Mary Hunt) that I want to make the spreadsheet tally for all the months….this would help with my “freedom” account. TFS!
I track all my monthly expenses on a single piece of paper. I have one sheet with multiple lines drawn across it and each section labeled with a category – eg. eating out, groceries, entertainment, gifts, etc. Every two or three days I grab my receipts, check my online accout and write each expense into its appropriate category. At the end of the month I tally everything up.
I keep my paper on a clipboard that I keep near where I watch TV, so it makes it easy to do when I’m watching TV. I’ve thought about using a computer program, but after 20 years of this system working really well, I think I’ll stick with it! I’ve saved my past records, so when I wonder if I can cut back, it’s easy to look back to a time when I earned less and see how “little” I spent back then!
I am soooooooo Type A, so this system should work perfectly for me. I’ve never tried a Pivot Table before, so I’ll have to play around with Excel to see how that works. Thanks for the tip!
I am very much type A. I have two spreadsheets in excel that I made up for our family. One is a running total of our debts largest to smallest with interest rates included, each month I update the total balance and add up total amount we’ve paid down our debt that month. Its encouraging to see all the totals going down every month. I also have a spreadsheet for our expenses, dividing our expenses into the typical catagories, groceries, gas, gifts, etc. I also examine these each month to see if and how I can cut back for the next month. I’m always looking for ways to improve my system and I am so thankful Carrie that you are sharing your tips and trials. It is such an encouragement. I look forward to trying to make a pivot table.
I found this tutorial on Pivot Tables and updated the post to include a link to it.
Is it bad that I read your post and the only thing that I remember is that you went to Qcumbers? After that was mentioned, I couldn’t think about anything else!
MMMMmmmmm…Qcumbers!
I guess this means I have REALLY far to go when it comes to keeping track of my spending. But, now I have the tools to get started! Right after I go to Qcumbers.
I use Mint.com to track my spending
Thanks, Carrie! I thought I was the only one who made my own system. I used it for years, then when I got married, we used MS Money for several years, but I hated that its canned categories didn’t tell me what I needed to know and that it didn’t let me compare categories from month to month or year to year so easily. We have gotten away from tracking anything and need to get back to it, and I’ve been wondering whether to use a canned program or go back to my old spreadsheet. Your post will help me do what I really want to do anyway: go back to my spreadsheet!
Thanks Carrie! I was interested in what categories you use. I use about 30 very detailed categories in Quicken which is why I never take the time to input our expenses to review. I am looking for something way simpler and wondering how you limit yourself to 10-12 categories. Thanks again for sharing this!
Ok, i am going to be totally honest. i do home daycare and my income varies and i get paid at different times, depending on the families. i am married but husband pays house hold bills. i have lived beyond my means and now have my self in credit card debt. some from over spending some from helping my kids out when i should not have. Hubby knows part of what i owe but not all of it. The cash card has gotten me in trouble and i have stopped using it for the most part. I feel like i am drowning and no way to get out. I don’t know where to turn. Tried LSS but they really didn’t help me any, was a young person and didn’t seem to understand my situation. HELP
Another encouragement about Dave Ramsey : He offers seminars all over the Metro area called “Financial Peace”. Many times they are held a various churches. We went to Dave’s website and there is a place to enter your zip code and then places in your area that offer the seminar will show up. This seminar was VERY beneficial! Can’t say enough about what we learned in those classes and how it helped us. He will help put you and your husband “on the same page” and give you a step by step plan of how to take control of your finances and get out of debt. He is also has a “call in” show on Fox where people call in live and ask questions. As a result of what we learned, we have been using all cash for over 3 years and WOW! What a difference that makes! No more over spending and I usually even have money left over. Carrie’s website has just added even more benefit and now with all her tips, we’re saving more on so many things. You can do it! Just take the first steps and move forward!
@Terri: I would not consider myself a financial adviser or marriage counselor by ANY means, but if I were in your situation, here’s what I’d do.
1) Tell your husband about your debt. He’ll probably be upset about it, but I think that he’d be most upset about the fact that you kept it from him. (At least mine would.) Still, it’s absolutely essential that you communicate with him about this, no matter how hard it might be. He can help you! If you do nothing else, do this. Don’t wait.
2) Get a copy of the book “The Total Money Makeover” by Dave Ramsey (borrow it from the library) and read it. ALL of it. He lays out a plan of action so simply for everyone who’s trying to get out of debt and learn how to manage their finances.
3) Stop using your credit cards and debit cards and use ONLY cash to pay for whatever you’re purchasing. This will help you see how much you really are spending and help you limit your spending if you resolve to stop spending when the cash is gone.
My prayers are with you!
Looking for the 10-12 categories you use in your Excel Spreadsheet. I have 12 I have come up with and would like to see your list. I am just starting this to try and track stuff, so not sure what I am missing… yet.
A friend of mine started a “non” method of budgeting….to “try-out” limiting expenses for their family. They decided to take out $300 cash each week on a particular day. $50 went to her husband and the rest was hers-since she is the buyer for the family. The money is to be used for everything other than mortgage and the regular bills. They started thinking about money so differently (she loves to shopand started saying no to things for a change), that I had to try it out.
Just the discipline of using cash was shocking to start with. I realized that when I would scan my card my brain did no work. With cash I was rethinking the real necessity of my items being purchased. There were times that I forgot to use cash, and scanned the card, then when getting into my car after my purchase thinking “you have got to be kidding me, I fogot to use cash.” I was so stuck into this card method of spending. I would then take the cash that I forgot to use and deposit it back into the bank to cover what I put on the debit card, trying to be honest with my money.
The amount of cash you take out can be anything, just try to stick with it for a month to reprogram your brain! We saved a couple hundred the first month. I went back to my old ways for the holiday’s-but am starting back on cash as of today! I really want to make a budget work, I am normally type A, but I do not want to do this stuff! I will make myself. Looking forward to learning more from the spread sheet catagories to keep it simple. Love this site Carrie!
I found your site through facebook and just wanted to share a tid-bit with everyone. googledocs is free to use. They have spread sheets, documents, and just about anything you can come up with. I am not great at creating spread sheets and my computer didn’t come with a good program anyway. I went to googledocs and found templates to use. The really nice thing is I can share them with my husband as well so he can also add our expenses.
My husband and I came up with a weekly/monthly/yearly Excel spreadsheet to track our spending and also to forecast how much “carryover” (extra money still left in our account) we will have at the end of each week. We also set this up to show us our end of week balance at least 3 months into the future. Not only has this tool helped us to adjust our spending habits based on extra income, or emergency purchases, but it has showed us especially in the last 8 months since my husband was laid off just how much God provides. Many times we have looked at our budget “forecaster” and determined that within 3 weeks we will be completely out of money-and EVERY SINGLE TIME we have come to that third week and we have somehow had enough-the money has just been THERE! It has taught me so much about faith and has helped me to depend more on God, and worry less. Obviously, I wish that my husband had a job within his profession, but this year has been a year that has grown my faith and trust in the Lord-and that lesson is a priceless one.
Carrie,
Is there a way for you to send me your spreadshhet/pivot table.
I have been looking and cannot find one that looks like it works as well as yours seems to?
I like all the features of the one you use.
Hi Carrie,
I was wondering if you would mind sharing the categories that you use. I have a tendency to use too many and then things get too complicated.
Thanks for all you do!
Carrie, I too was wondering if you could let us know the categories that you use for your tables. I really want to get on board with this and I find it helps when I try to follow and learn from what others have done and then tweek it for me if needed. We are starting in Feb, and would really love to get this whole sheet organized and ready to go for being used on Feb 1st!
Thanks again for all that you do for all of us that come to your website.. it has saved me a whole lot of money. Last week alone at Pick N Save I spent $60 and got over $550 in groceries. Now need to find different ways to use the food!
Sorry… my next question as I am trying to do this. I don’t have excel it does not come with Vista and the one I have is too old of a version to use on here. I would have to purchase the entire one. So i am using starOffice Calc. I am not sure if this is the same. I can view adn use exel documents when I get them sent to me or I get the template online. Do you have a blank template that you might have from yours that you would be willing to sell or share? Just a thought. Since i has worked so well for you, i really have to try this. I need something that will work and work for my family, I think this will
Carrie are you going to continue this? You were going to explain your cash flow portion and your expense categories….can you please, please finish????
Carrie, my husband and I have been attending Dave Ramsey FPU and are working hard to get spending under control. We have put together a budget on Excel. We now need to track more details and it sounds like your Expense Tracking method is exactly what we need to do next. I was going to purchase Quick Books when is was on sale at Costco but it was not in our budget. Is there a link or download to get your categories and formulas to get us started with an Expense Tracking Excel spreadsheet?
Sounds like myself and others are desperate to learn more. This is my first time on your site (mentioned last night in the Dave Ramsey group discussion). I am thrilled to learn more to make this process easier so I can still spend time with my 21 month old and 5 1/2!
Carrie, read your article in the Wenatchee paper, caught my attention. I really need help – looking forward to tips to help me get back on track.
I would really love to know the categories you used. Thanks!