6 Ways to Track Your Spending

1. Make a Budget
Building a monthly budget is the cornerstone of your financial plan. It helps you to account for your income and track where each dollar goes every month.

Start by listing your total income. This includes any income from any source, such as your salary, freelance income, or personal income from a business you own.

Next, list all your expenses. That includes essential and discretionary expenses. Subtract expenses from income to get your remaining funds. If you have funds remaining, you have extra discretionary income. This means you have extra to pursue your hobbies and interests, spend more on discretionary items, or save. If you find that you’re spending more than you earn, you may have to reduce expenses in some categories.

After that, set spending limits for each expense category to stay on track and ensure you have money to save every month. Alternatively, consider using a budget framework to build a budget that works for you. For example, you could consider the 50/30/20 method. This budget plan involves grouping your expenses and setting spending limits on categories that are divided up as needs, wants, and savings.

2. Open Separate Bank Accounts
Consider separate bank accounts for each budgetary category to make tracking spending easier. For example, you may open different checking accounts for necessities and wants. Then, you may have separate savings accounts for short-term and long-term goals. This helps you automate transfers into the correct accounts and avoid pulling funds from the wrong account.

3. Check Your Statements
Reviewing your bank and credit card statements helps you see your spending in real-time and potentially find expenses you didn’t realize you had, such as unused subscription services. This also helps you catch unexpected or unauthorized charges to prevent unnecessary expenses.

Make a habit of going through your bank and credit card statements monthly. Highlight your recurring expenses, check your spending against your budget, and note any irregularities.

4. Use Expense-Tracking Apps
Expense-tracking apps, such as American Express SpendSmart™, could simplify financial management and expense tracking by compiling your data in one place. These let you connect your financial accounts from various institutions, importing and categorizing transactions or letting you enter them manually. That includes accounts like:

• Bank Accounts (Checking and Savings)
• Retirement Accounts
• Investment Accounts
• Loans
• Credit Cards

Many apps let you create an in-app budget. The app then tracks your transactions against your budget, showing whether you’re on track or about to exceed your spending limits. They also use graphs and charts to help monitor your progress long-term.

5. Make a Spreadsheet
Spreadsheets could take more work than expense-tracking apps, but they let you customize every row and column to fit your needs. Therefore, they could work well for people who may have more complex budgetary situations, such as fluctuating self-employment income.

To track spending with a spreadsheet, you must hold onto receipts, check statements, and enter data regularly. Spreadsheet formulas could do many calculations for you, leaving you with just the data entry.

6. Track Your Expenses Regularly
Spending needs could change over time, and not everyone creates a perfect budget the first time. You must track your expenses regularly to better your financial health and advance toward your goals.

However, you don’t need to do this daily. Instead, consider reviewing once per week. Check your spending against your budget by looking over your statements and your spending app or spreadsheet. Set a monthly time to review the past month and adjust your budget as needed for next month. Eventually, these become habits, helping you improve your financial picture.