Optimizing your money management starts with tracking your spending.
By carefully examining and tracking your expenses, you can understand your common financial pitfalls. You can steer your finances intentionally, instead of hanging on for dear life.
A spreadsheet is the easiest method for tracking expenses.
There’s a reason personal finance nerds love spreadsheets – they’re free, easy to set up, and can be used on-the-go thanks to apps for both Google Sheets and Microsoft Excel.
Plus, in a spreadsheet you can build everything – from a monthly expense tracker to a small business budget to a household budget planner.
But first, you need to get started the fundamentals. Here are 5 steps to help you get started with tracking your income and expenses in a spreadsheet.
Step 1: Read your monthly account statements.
No one expects you to get excited when your monthly account statements arrive, but those statements are actually the key to living your best financial life.
So grab some coffee, get comfy, and read them from start to finish.
Account statements show you what came in and went out, or, your cash flow. Your cash in-flow shows your spending potential, and your cash out-flow shows how you used your money.
Hopefully, your in-flow outpaces your out-flow, but if you’re reading a credit card account statement, there’s a good possibility that your out-flow is far outpacing your in-flow.
Seeing your spending in black and white can be sobering, but it’s the first step to taking control.
Step 2: Categorize your expenses.
The next step is sorting your expenses in a meaningful way. Examples of common expense categories are mortgage/rent, utilities, kids, pets, health, groceries, restaurants, cars, clothing, travel, insurance, and debt repayment.
Your categories need to be mutually exclusive and collectively exhaustive.
Everything needs to fit in exactly one budget category, and you should use enough categories to encompass the entirety of your spending.
Don’t include too many categories, or you’ll get bogged down in the details.
It’s best to keep everything simple to start; you can always add more budget tracking categories later.
Your spending will naturally fall into fixed and variable expenses.
Fixed expenses cost a set dollar amount (give or take a couple cents) each month, such as mortgage/rent, insurance premiums, and debt payments. Variable expenses change, like the cost of your groceries and gas.
If you’re looking to reduce your expenses to put more toward savings or debt repayment, the variable expenses will be the easiest to adjust.
You would be surprised how much you’ll save by packing a lunch or cancelling unused subscription services.
Curbing small spending habits can free up a considerable amount of money to put toward your financial goals.
Step 3: Use an expense tracker app.
There are tons of apps available for tracking your spending, including You Need a Budget, Mint, and Personal Capital. Each app tracks your spending a bit differently, so you can be sure to find something that plays to your preferences.
Apps allow you to take your budget wherever you go so you can make financial decisions in real time. Consulting the app before purchasing can prevent impulse buys and keep your spending on track.
Step 4: For greater control, use an expense tracker spreadsheet.
Apps are great, but spreadsheets are better. Apps force you to track your spending based on the programmers’ preconceived ideas of how to best create a simple budget.
While not necessarily bad, this is also limiting.
Only spreadsheets are fully customizable. You can create your own free expense spreadsheet template or download many pre-developed budget spreadsheets and customize to your specifications.
Thanks to apps for both Google Sheets and Microsoft Excel, you can get the flexibility of a spreadsheet with the mobility of an app.
Regardless of the method you use, you need to get all that juicy financial data into a format that enables you to track your spending month to month.
Step 5: Find room for improvement.
No one’s finances are perfect, but the closer you track your spending, the more you can anticipate impending cash flow short-falls or find extra money to put toward savings or debt repayment.
By tracking your spending month to month, you’ll also see how your spending fluctuates. Periodic expenses such as quarterly insurance premiums, back to school shopping, birthdays, and holidays can wreak havoc on even the best financial plans.
Over time you can anticipate these expenses and plan accordingly so they have less of an impact on your spending.
Love tracking spending with spreadsheets, but hate manual data entry? Tiller is the only tool that automatically updates Google Sheets and Excel with your daily transactions and expenses. Instead of spending hours updating your budget, you can monitor your finances in the time it takes to drink your morning cup of coffee.
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Start a free trial of Tiller Money and see why "89% say spreadsheets give them more control over how they track their finances" - Inc. Magazine, "The Science Behind Feeling In Control About Your Money"