Tracking monthly expenses. Surprisingly, this is the one thing I did correctly long before I had my entire financial act together. I believe I started doing this around when I moved to Texas.
It was very simple. I just listed out the days of the month in Excel and put the names of my expenses on the date they were due.
Tracking your monthly expenses is a great strategy for improving your finances. It helps you get a clear picture of every dollar youâ€™re spending, helping you make smarter money decisions.
Why I Tracked My Monthly Expenses
I decided to track my expenses so that I could:
- Always pay bills on time
- Have a better idea of my monthly expense needs in order to know how much I needed to earn
- Determine how much I truly needed to spend each month and find expenses I could cut
- Figure out how much I could spend on non-essentials after the bills were paid
Here’s a pic of the monthly expense tracker I used (download it below):
As you can see, itâ€™s not complicated, but it does the trick. Youâ€™ll notice that Iâ€™ve added columns for Savings and Income.
This simple tool helps us to visualize our financial framework and put everything that impacts our finances into perspective.
You donâ€™t have to use Excel. You could very easily track your expenses the old-fashioned way, with just a pencil and paper, if you like.
Plus, there are plenty of online budgeting tools that help people to track their monthly expenses with ease.
Why Not a Full Budget?
One thing to note is that with this tool, weâ€™re not tracking ALL of our expenses. This is not a full-blown budget. A detailed budget may not be worth the time and effort for everyone.
The purpose of this particular spending tracker is not to know every single thing you spend money on but to understand the regular (fixed) expenses.
We chose not to track categories such as meals or entertainment on this tracker because those are variable expenses. They change from month to month, so we leave those out.
How to Conquer Monthly Expenses
Now, letâ€™s look at the big issue for many of us, which is when thereâ€™s too much month at the end of the money. Plenty of people are stressed out, and rightfully so, because they just canâ€™t get ahead on their bills enough to save for the future.
Here are some suggestions for conquering your monthly expenses. Itâ€™s better to take action now, before you find yourself in debt and unable to move forward.
Know Your Monthly Expenses
Listing all of your fixed, predictable expenses can be a really clarifying exercise. As discussed above, even if you donâ€™t do detailed budgets, checking in on your regular monthly expenses is critical.
My Fixed Expenses
Itâ€™s easier than you think. Just go to your checking and/or credit card account statements and locate your fixed monthly expenses. To give you an idea of what to look for, here are my familyâ€™s regular, fixed expenses:
- $1,017 â€” Mortgage
- $182 â€” Cell Phone Service
- $79 â€” Internet Service
- $50 â€” 529 College Savings Plan Contributions
- $43 â€” Term Life Insurance
- $43 â€” Gym and Health Service
Other common fixed expenses you might include here are auto loan payments and health insurance premiums. Those arenâ€™t included for us because we own our cars outright and pay our health insurance from the business account.
Youâ€™ll notice that each of these expenses is associated with a contract or auto-pay option, and theyâ€™re usually fixed (within a dollar or two) each month.
When going through your monthly expenses, this is a good time to stop and ask yourself if they all make sense. Are you using each of these services? Do you need to add anything? Could you eliminate anything? Or, is there a way to reduce your monthly payments?
For example, if youâ€™re struggling to pay all of your bills, youâ€™ll want to look at canceling anything you donâ€™t need, like the gym membership. Or you might temporarily stop contributing new funds to 529 accounts until you get back on firmer footing.
Next, examine the dreaded regular, yet variable, monthly expenses. You donâ€™t have much choice about paying these every month, but the totals will vary depending on usage.
If you look at these regularly, you should be able to come up with an average per-month cost for things like utilities.
Utility companies often provide some stats to help you plan or offer a stable monthly payment plan that balances out how much youâ€™ll pay each month.
These are our estimated variable monthly expenses:
- $250 â€” Electric
- $55 â€” Water/Trash
- $40 â€” Gas/Utility
The purpose of this section is to get to a fairly exact number of what expenses youâ€™re obligated to pay each month, based on the agreements in place. This is a good starting point for evaluating the rest of your spending.
All of your other expenses are going to be variable, and often you have a lot of control over how much you spend in those categories.
These are a few of the possible variable spending categories you might need to consider:
- Dining out
- Personal Care
Consider Moving to Annual Payments
One strategy that takes some of the stress out of making monthly payments: consider moving to annual or semi-annual payment plans. Weâ€™ve done this with our tithing, auto insurance, property taxes, homeownersâ€™ insurance, HOA dues, and retirement savings contributions (quarterly).
Of course, along with the convenience of only needing to pay these expenses once a year comes the responsibility of making sure you have the funds on hand for them. We can mitigate that risk by setting up multiple automatic savings plans in our high-yield savings accounts.
Be Aware of Big, Out-of-Control Categories
Beyond those fixed and variable regular monthly expenses, youâ€™ve got these highly variable expenses: food, travel, fuel, dining out, gifts, clothing, personal care, entertainment, pets, household, etc.
Individually, many of these expenses may not amount to much in a month. But food is a big one for us (and for many families). Think about each of these categories and identify any weak spots you may have, where you tend to overspend.
In these problem areas, itâ€™d be good to budget more carefully. Start by looking at your recent average monthly spending in an area like groceries or eating out, and then set a goal for the coming month.
One way to keep on target in this category is to withdraw cash in that amount and allocate it only for that category. Once youâ€™ve gone through the cash, challenge yourself not to spend any more until next month. You can also employ this method with certain online bank accounts that let you set up â€œbucketsâ€ for individual spending categories.
Many of us have multiple problem categories in our spending. In that case, itâ€™s probably best to start doing a detailed budget every month with something like You Need a Budget (YNAB).
Download the Monthly Expense Tracker
I’ve made this monthly expense tracker available for free direct download in Excel format. Simply click on the link below and you will be prompted to save the file to your computer.
You can then use the file in Excel if you have it, or upload it to Google Docs and work with it there. Enjoy!
Download: Direct Download
You Can Conquer Monthly Expenses For Good
Youâ€™ll always have some monthly expenses. Even people with paid-off homes and zero debt have to pay some bills: taxes, utilities, food, lifestyle items, and more.
This means that while tracking monthly expenses may be a challenge, itâ€™s one that youâ€™ll face all your life. You may as well get good at it!
Work at becoming more conscientious in your monthly spending and periodically re-evaluating your financial situation.
What approach do you take in staying on top of your monthly expenses? Are you a detailed budgeter? Are you oblivious to your spending habits? Let us know how you tackle your spending habits.
Looking for more free excel spreadsheets? Check out 7 Free Excel Templates for Budgeting, Expense Tracking, and More