How To Track Your Expenses And Control Your Spending

Have you ever asked yourself, “where did my money go?”. You just got paid, but your bank account balance says otherwise. Your paycheck was deposited, but expenses quickly eroded it. Month after month you find yourself in the same financial predicament, living paying check to paycheck or not getting ahead. I want to talk about how Abby and I created a plan to avoid this pitfall, knowing that it sadly is a very common experience many face.

Where to Begin?

Auto-pay and other convenient payment options have disconnected us from our finances. Gone are the days where every transaction was made by handing over hard earned cash. The first step in developing a budget, is to create a baseline of where your money is currently going. There are a lot of automated tools that will track your expenses for you. I have personally used quite a few of them over the years. However, something about using an automated tool didn’t give me the results that I had hoped for. Last year, during a conversation with my brother-in-law Dan, he told me his strategy, and it completely changed things for me. The strategy is so simple, it could easily be overlooked. All you do is write every transaction out, the store name, and how much was spent.

This strategy allows you to become in tune with your finances by tracking every dollar spent. For example, let’s say you went to Starbucks 15 times last month. Writing down Starbucks for each transaction becomes eye opening. Adding up each trip uncovers you spent over 80 dollars on Starbucks coffee. Based on this information, maybe it’s time to start making coffee at home. Changing your behavior and controlling your spending habits will change your life.

How to Track Your Expenses

At the beginning of every month, I review all of my families expenses from the previous month. I login to each of our bank and credit card accounts. Line by line, I manually enter each transaction into an Excel spreadsheet. The first few months were exhausting, as there were a lot of expenses to write out. The sub-sequential months became easier, as we began to take better control of our spending. Resulting in the number of transactions being reduced and money being saved.

As a household, we have reevaluated our spending habits expense by expense. We have canceled music / TV streaming services and car wash membership subscriptions. Money that became unallocated, was redirected towards other initiatives: saving for the future, building passive income, and being more generous.

Different seasons of life bring change, and with that, priorities shift, things that used to hold a level of significance don’t anymore. Two of my children recently started school and the price of the tuition is $200 dollars a month per child. For some families, a $400 dollar monthly bill isn’t an issue to pay, and the money can come from an unallocated portion of the budget. For others, $400 dollars will need to be carved out of the existing budget. Meaning, other less important things will have to be cut out, in order to pay the bill. As a parent, you will deal with this; your child’s needs come before your desires.

Hourly Wage

Every job can be broken down to an hourly wage, whether you are a worker that gets paid by the hour, by the job, or salary. For example, a job paying $25 dollars an hour is equal to a salary of $52,000 a year. Knowing your hourly wage can help you make better spending decisions. When you are going to purchase something, equate that to the number of hours you had to work for that item. Instead of looking at a new pair of shoes as only $75 dollars, ask yourself, am I okay spending 3 hours of work for them? If your budget allows and you are okay with spending 3 hours of wages on the shoes, then go for it, if not, put them back. Another item that a lot of people get stuck paying month after month for is a gym membership. Cutting the gym membership out and picking up other workout habits like running and calisthenics can help save hours of wages each month.

Understanding the Importance of Tracking Expenses

Dave Ramsey, has said that “personal finance is 20% head knowledge and 80% behavior”. Reviewing your expenses and building a budget is beneficial, but it is futile if you don’t change your underlying spending habits. It’s never too late to focus on your finances in order to achieve the level of financial freedom you desire. Any amount of money that you are able to reallocate can be used to build an emergency fund, pay down debts, build wealth, and give more.

At the end of the day, you don’t need to accumulate more stuff. There is no value in hoarding more materialistic things, it will only add to the spending problem. You don’t need an excess amount of clothing, the biggest house, and the newest electronics. All you need is the essential items of life: food, clothing, and a shelter. Maybe it’s extreme, but the fact is that neglecting your finances and allowing poor spending to plague your life will lead to a dysfunctional life. Life can be stressful enough, and it wouldn’t be wise to add more stress to it by inadequately managing your finances.

“We buy things we don’t need with money we don’t have to impress people we don’t like.”

― Dave Ramsey, The Total Money Makeover: A Proven Plan for Financial Fitness

Prioritizing Necessities and Responsibilities

Now, if you reviewed all of your expenses and determined that everything you and your family spend money on is necessary, then it may be time to ask for a raise at work or pickup another job. For years, I personally worked three jobs. It wasn’t always fun, but as a man, I’m called to provide for my family (1 Timothy 5:8). Men, if you are playing in recreational leagues, gambling/sport betting, or spending unnecessary time engaging in activities that pull you away from your home, when your finances are not in order, it will undoubtedly impact your marriage for the negative. Straighten out your priorities. Don’t neglect what God has given to you; be a good steward of your time and resources. Start changing your life today by tracking your expenses, controlling your spending, changing your mindset about money, and avoiding the pitfall of poor finances that so many find themselves in.