Expenses can be very tricky to manage. Going out a few times a week, buying coffee on the way to work, stacking up on shirts or dresses… It can become very quickly difficult to stay on top of your spendings. Here is how you can track your expenses in detail in a few simple steps and kick-off your expense tracking habits.
Before you start, it is important to note that no saving hack can optimally work without actually knowing where your money is going. Also, unless you want to go down the road of absolute hardcore frugality, discipline is key to a lighter way of saving your hard-earned money.
PS: It can be much more efficient to tackle steps 1 and 2 at the same time, that would save you a lot of time.
PPS: It would make the steps below much easier if you use a software like Excel or any other you prefer.
Step 1 – Write down all your expenses
This is actually the hardest step of all, most people would start it for a few days and then just get lazy about it. But you won’t, I just know you won’t.
Start by writing down your expenses for a period of time. I find it is most helpful if you actually do it for a month, that way, you have a quite complete idea about the current state of your finances. You can do it for a longer period if you wish but that won’t be necessary for this exercise.
While you are keeping a log of your spendings, make sure to include any information that might seem relevant or important for each entry. For example, if you ordered a pizza for diner, make sure not to only mark it as Food but also Ordered In. This information will be very helpful in Step 2.
Here is an example on how you might want to do it in Excel, of course you can include more or less sub-categories depending on your need:
Step 2 – Analyze
Now that you have the list of all the expenses for the period of time you have chosen (preferably one month), tag and group them (preferably using software such as Excel or others).
Basically, at this stage, you have all the data to know exactly how much was spent on Food, how much of that was Ordered In and how much went for Groceries.
Here is how you could analyze the Food entries using Excel Data/Filters for example, you can see the sum at the bottom of the window:
In this example, you can then go a step further by filtering on Coffee entries:
Step 3 – Optimize, dig deeper and repeat
Now that you see where your money went, you have all the data to make an informed decision. Are you actually spending reasonably or does something seem too much? If something seems off then the following month is the right time to correct it.
When I did this exercise, I realized my daily coffee was actually costing me 4 times my mobile subscription. This actually added up to hundreds of dollars per year.
Obviously, it is difficult to do all of this using pen and paper as that would require some time and effort. It would be preferable to use software (Excel or other) to automate all number crunching and dashboard generation.
Bankslash makes all this much easier
As you can see, even with a software such as Excel, the excercise above is still not smooth enough. Bankslash offers a very easy to use interface to manage all that in a few clicks.