How to track expenses

July 07, 2023

If you feel like you should have additional cash each month to save or invest, you’re not alone. 

Does this scenario sound familiar? You recently got a raise, but you’re not transferring any additional money into your savings or retirement account each month. It may feel like the money is disappearing with little to show for it.

Getting a handle on your money starts with awareness. Learning how to track your expenses is the first step in building a financial plan that helps you work toward your financial goals. These five tips can get you started. 


1. Calculate monthly expenses

Tracking your income and expenses is the first, crucial step toward eliminating spending patterns that can slow down your saving and investing. It can also draw attention to problematic purchases you might not be aware of, including fraudulent or double charges.

To get a sense of your monthly expenses, put them into two categories: fixed expenses and discretionary expenses.

  • Fixed expenses include your rent or mortgage payments, vehicle payments, insurance, daycare, groceries, utilities (gas, electricity, Internet) and any loan payments you’re required to pay each month. If you’ve been setting aside a certain amount for your savings, include that, too.
  • Discretionary expenses include dining out, entertainment, and leisure. Think movies, vacations, or other expenses that you can do without, or at least trim. There are often discretionary expenses that you might not immediately think of, such as streaming video or food delivery services that you subscribe to.

If you share expenses with your partner, go over your monthly spending together. If you share accounts, you’ll want to be aware of one another’s expenses and discuss your savings goals and a budgeting plan that works for both of you.


2. Assess your spending and reduce monthly expenses

After about a month of tracking your spending, you might notice unnecessary expenses that are bloating your budget.

And it may not be just discretionary expenses that you find yourself second guessing. You might be surprised to see how much your Internet, cable and cell phone bills add up to each month. Maybe you can find a better deal on your car insurance, or perhaps you can consolidate your debt to get a better interest rate.

Even subscription services can eat away at your budget. Review your spending to find subscriptions that you may not need anymore, such as streaming apps, online storage, or other digital services. 

The opportunities for saving become focused once you take a clear-eyed look at how you’re spending. 


3. Build your budget

Each person’s and family’s needs are different and there are several budgeting methods to choose from. However, “proportional budgeting” is one of the most popular. With this approach, you divide your after-tax income into three categories: generally, 50% for fixed/essential expenses (needs), 30% for discretionary expenses (wants) and the remaining 20% for savings or paying off debt.

Whatever the right ratio is for you, budgeting can make goals feel much more attainable. That vacation you’ve always dreamed of or new car you’ve had your eye on can be a reality sooner than you might think if you know where your money is going and can adjust when necessary.


4. Tools to track expenses

Once you’ve built your budget, stay on top of tracking it. Create a spreadsheet of your income and spending, download a budgeting app or use your bank’s online or mobile app to track your expenses and build out your budgeting goals.

Apps may be easier to use as they offer a ready-made framework to categorize income and expenses and provide an at-a-glance snapshot of your saving and spending. You can also typically sync all your financial accounts in the app. However, cloud-based spreadsheets often have built-in expense tracker templates, are customizable and can more easily be shared with a partner or financial professional. 

The good news is, no matter which you prefer, there’s more than likely an expense tracking method that will work for you.


5. Get advice from a professional

Sticking to a spending plan you’ve created for yourself can be difficult, so consider speaking with a financial professional. A financial professional may be able to help you tackle the challenges you’re unsure about, such as saving more for large purchases or how much more to invest for retirement.

Being more mindful about your spending and budgeting habits may help you set aside more money each month to pursue the goals that matter most to you.


Tracking your spending is the first step in creating your personalized financial plan. Read more in your four-step guide to financial planning.

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