How to Get Started with Tracking Monthly Expenses Easily?

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Tracking monthly expenses helps you gather an idea about your spending patterns and where you spend most of your money.

Moreover, with proper tracking, you can modify your spending behaviours to reach your financial goals more effectively. That being said, you can track your monthly budget through many methods depending on your lifestyle and convenience. You can either monitor every transaction or track down your overall expenditure. So, please continue reading to get an idea of the different tracking methods.

Before starting the budget track, there are a few things you must keep in mind. For instance, you can start by separating your expenditures into three main categories, i.e., needs, wants and savings.

The following are the primary steps that you can follow to start monitoring your monthly expenses:

1. Check Your Account Statements

First, it is important that you check all your financial statements, including credit card usage, current account, etc. This will help you identify where you have spent your money and in what manner.

Your financial statement includes both variable and fixed expenses:

• Fixed Expenses: These include your housing rent, electricity bills, loan repayments and other expenses that are likely to remain constant every month.
• Variable Expenses: These include food and clothing expenses, lifestyle activities, travel, etc.

After tracking down your bank statements, you can readjust your spending accordingly to save more for the future or an upcoming goal.

2. Group Your Expenses

Categorising your expenses will give you a clear idea about the necessary and luxury spending. This not only aids in organising a proper budget but also in prioritising where you want to put more money.

As mentioned earlier, the easiest way to sort your budget is by classifying your expenses into three categories. They include:

• Needs: The 50/30/20 rule can be helpful if you are new at budgeting. It means that 50% of your money should go into the necessary items, 30% should be spent on your wants, and the remaining 20% must go for savings and investment. Therefore, the category of needs constitutes the major portion of your spending. It generally consists of the following:

  • Home loan, rent, or property tax.
  • Utilities such as groceries, electricity bills, cooking gas, water, mobile and internet costs, etc.
  • Car loan, petrol cost, insurance premiums or public transport costs.
  • Health care costs such as insurance, medicines, and emergency medical costs.
  • Life insurance premium (if any)
  • Child care and education.

• Wants: Your wants make up for 30% of your expenses. However, the spending of this category mainly falls under variable expenses and may vary every month. Moreover, since they do not have any fixed costs, you can make most of your budgetary adjustments in this category. It may include:

  • Shopping, travel, etc.
  • Movies, concerts or other events
  • Dining out, long weekends
  • Lifestyle activities such as gym, yoga, etc.
  • Online subscriptions
  • Beauty and self-care
  • Home decorations or appliances
  • Track Savings And Debt Repayment

You must ensure that your investments are not compromised for your wants. Following are the ways how you can increase your savings and investments:

• Traditional savings account
• PPF and EPF accounts
• An emergency fund with high liquidity
• Equity investment
• Mutual fund
• Fixed deposits, etc.

1. Paper and Pencil

2. Activating SMS Alert for Each Transaction

3. Digital Spreadsheet

4. Monthly Budget Tracker

Keeping proper track of your monthly expenses can help you in several aspects of your financial life.

So, check out the top 6 benefits of monitoring monthly expenses:

1. Better Organisation of Finances

2. Identifying Spending Issues

3. Offering Better Control Over Your Finances

4. Reaching Your Goal Easily and Quickly

5. Encouraging Savings and Reducing Over-spending

6. Keeping Away From Debts

When you have a clear idea of your income and expense, your money management skill also heightens. Hence, you can be more motivated to fund your needs and wants from the savings you make instead of borrowing. Moreover, your debt repayments may multiply if you do not monitor your finances well.

In essence, setting a budget is crucial when you have multiple financial responsibilities to take care of. However, if you do not monitor your day-to-day expenses, you may unknowingly exceed your budget.

Therefore, tracking monthly expenses is a great way to manage your finances successfully without facing any confusion about where your money is going. You can follow the simple steps mentioned above and create your own budget structure manually or use a budget tracking app for a quicker result.