How To Save Money by Tracking Your Finances | SStoFI (2024)

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How To Save Money by Tracking Your Finances | SStoFI (1)

This post will reveal how tracking your finances can save money. Follow me as I track my own expenses for one month, learn where I’m overspending, and how small adjustments end up saving me thousands of dollars.

How I save money by tracking my finances

As you may have noticed from my 10-Year Goals page, one of my personal goals is to lose a little body fat. I’m not in my 20’s anymore and as it turns out, I can’t eat as though I’m still in my 20’s! With age comes a slower metabolism and the need to be more aware of both quality and quantity of what I eat. If I want a fighting chance at shedding body fat, I have to track everything. Everything! Without tracking, I have no accountability. No accurate awareness of the effects of the choices that I’m making.

By tracking food choices and total calories consumed, I gain insight into what is working and what isn’t and I can make smarter choices. When the data can show me positive changes, I feel more motivated to continue making progress. When I get lazy because my motivation isn’t strong enough to stay disciplined, I stop logging and start making poor food choices. One little slip-up usually snowballs into another and another. Small mistakes grow into overall poor food choices and subsequent weight gain. While it’s tough to get into the habit of logging food, when I actually stick to it there is a clear positive feedback loop that makes continued success possible.

Tracking my finances is a lot like logging calories. Every time I stop tracking my spending, I start overspending on little things. And then those little things add up into bad spending habits.

This is where financial tracking is so important.

My financial tracking history

My financial tracking history has some ups and downs. It wasn’t until the last year that I really started to embrace tracking and see it as the amazing tool for success that it is. I would track periodically, utilize the benefits, then go back to my old spending habits. Namely, I’d make sure my bills were covered but otherwise turn a blind eye. And naturally, there are consequences to choosing ignorance!

I first started tracking my finances about 8 years ago. I wanted to move from an apartment into a cute little home because I was really bothered by the stigma of apartment living. My son and I lived in a great school district and I didn’t want to be the only parent around that wasn’t living in a nice home. What can I say? There is A LOT of pressure in my area to conform to a certain high standard of living.

The first step I made in determining whether I could move was to put every single expense that I had into an excel spreadsheet. I needed to quickly calculate out different scenarios and see how my monthly finances would be affected. After just two hours of playing around with my numbers I was able to decide just how much I was willing to pay in rent, as well as what changes I could make in order to create a little more savings to remain comfortable.

This process was so helpful in making my renting decision. I was able to very clearly negotiate my price because I knew exactly what I had to spend. Unfortunately, once I made the move, I stopped tracking my spending. I revisited my spreadsheet a few more times over the years, mainly when a big life change was coming up and I needed to make a decision. It was very helpful in making those choices, and I always had a better idea of what my spending looked like, but I failed to use it as a tool to get ahead.

What was the consequence of not continually tracking and monitoring my spending?

I finally came to my senses years later when I realized that I was floating by, not really making any financial progress, and feeling very frustrated that I was living paycheck to paycheck.

I revisited my excel spreadsheet, filled in my last 30 days of expenses and started investigating every single spending category. This process was extremely insightful and I found multiple categories that needed attention.

Action Step: To make my life easier, I created a monthly expense tracking worksheet, as well as a budget printable. You can download them over at my FREE resource library!

After one month, this is what I learned

Automobile expenses/gasoline

Auto Loan$315
Gas$250
Parking$33
Total$598

I was spending $600 alone on my car loan and my commute. I was also spending up to 3 hours sitting in traffic every single work day. This was the first category to tackle. I researched possible ways to decrease my commute time and considered paying off my auto loan. Then, I was able to map out a route that involved biking and taking the train to work instead of driving. When I researched commute programs offered through my work, it turned out my employer would pay me to hand in my parking permit and they would cover all public transportation expenses.

I also ran the numbers and decided it was beneficial to take money out of my savings and pay off the remainder of my car loan. Here’s what my updated expenses look like:

Auto Loan$0
Gas$130
Parking$0
Commute Club$25
Total$105

Not only did I decrease my auto expenses by $493, I now get my exercise in by biking every day, I’m way less stressed out from sitting in traffic and dealing with road rage every day and I’m being kinder to the environment. This has been a huge lifestyle improvement.

Action Step: For examples of expense tracking categories, visit150+ Expense Tracking Categories to Help You Track Your Finances

Tip: If you follow along withThe True Cost of Your Morning Latte, what would $326 savings per month look like in 10 years? $56,000!!

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How To Save Money by Tracking Your Finances | SStoFI (2)

Groceries/Eating Out

Groceries$580
Eating Out$350
Total$930

For a family of two (and one not even an adult!), this is a lot of money. Do I really need to be spending this much on food? I’ve since set myself a budget, complete with text alerts from my bank as soon as I reach 75% of my set amount. I eat out less, make my own coffee at home and started planning my lunches for the week, usually by making extra food the night before and taking leftovers to work the next day. Here’s my updated budget.

Groceries$500
Eating Out$200
Total$700

Overall not a huge improvement, but I’m still working at it, trying out different meal planning solutions to find what works for me. And really, an extra $230 saved every month is not insignificant!

Home internet/cable

We all know the drill. Every 1-2 years you start to notice that your cable bill has suddenly skyrocketed up. We have reached the end of our promotion pricing. Arg!! I called my cable provider and requested an internet only plan that wouldn’t change price. I dropped my cable and added Hulu. While I was really hoping to find some big savings in this category, it didn’t work out that way. Total cost savings: $15. But at least I won’t have to call them back every year.

Personal Care

Here’s the category that still needs a complete overhaul if I really want to aggressively increase my savings. Check out my post The True Cost of Your Morning Latte to see just why I battle with this category. Off the bat, I can say that my personal care spending doesn’t hurt me when I’m not tracking my expenses. I don’t notice a big dip in my checking account, I’m not using my credit card and racking up debt when I pass by the Mac counter at the mall. But when I do track my expenses and I see the total for this category, I have to do a double take. I spend what on personal care?!?! What the hell happened! And why would I need to spend this much? So I’ll lay it out there for you, here’s what my spending looks like:

Monthly Pedicure$30
Averaged monthly salon$85
Skin care (Sun damage reversal)$50
Skin care (Products)$150
Total$315

If I were adding this to my long-term savings every month, I’d have an extra $50,000+ in wealth in 10 years. That’s significant. So how do I regain control of this?

I could go through with the painful process of breaking up with my hair stylist and face her disappointment in me when I tell her I plan to start coloring my hair myself. Yes, I’m afraid to do this. I’ve been using her for years. She knows me better than some of my friends do! She will tell me that I’m making a mistake and my hair won’t look natural or be as healthy. I’ll be taking away from her livelihood. My hair will look terrible. My excuses go on and on and on. The reality is that I will save a lot of time and money and hardly anyone will notice the difference. And my savings account will thank me.

I could also decrease my skin care treatment and product expenses. No one likes getting older. More so, no one likes looking older. Today there are ever-improving options to slow down the visible aging process and reverse sun damage. This means professional treatments and high-end products for maintenance. Yes, this is elective. I spent a lot of time in the sun throughout my youth and I’m paying the price. I also continue to spend a lot of time in the sun with all my bike commuting now.

My plan to lower my spending in this area is to keep researching appropriate product lines for my skin care needs and minimizing treatments. Being aware of my overspending is half the battle and I’m not likely to give in to buying anything other than the services and products likely to make the most impact. Overall, I can bring my spending down by at least $100/month, it’s just a little harder for me to make this switch. Continuing to run my numbers every month and seeing the financial damage I’m inflicting will get me there.

TIP: The main reason that I am having trouble cutting spending in my personal care category is I don’t have a specific savings goal set. I still don’t know exactly where I am going. I’ll refer back to something I say a lot:

If you don’t know where you started or where you are going, you have no clear path to follow.

In tracking my finances, I know where I am starting. But I haven’t clearly defined where I am going. Why would I change if I haven’t clearly defined the reward for my frugal efforts? It’s so much easier to turn a blind eye and fall back on ignorance. However, if I were to determine that I could achieve financial independence and leave my job in 5 years if I decrease my spending by an additional $500/month…… I bet I’d find a way to cut down on my personal care category!

Memberships/Services

As I combed through all my expenses, I found a few that I didn’t even know I was paying. These are in the form of auto-renew memberships or services. I had multiple health apps for my phone that I was no longer using and yet my credit card was automatically being charged every month to renew the services. Here’s what I found:

Aaptiv$10
Kindle Unlimited$10
Daily Burn$15
LoseIt$20
Macrostax$5
Total$60

While this isn’t much compared to my other spending categories, it’s still $60 that I was unknowingly spending every month for services that I was no longer using. That’s $720/ year that I would have spent had I not gone through every little expense while tracking my finances. These little errors add up.

Recap

While it might seem like a painful and time consuming process to track your income and expenses, it really is the only way to know exactly where you are and create a plan for where you want to go.

By tracking my own spending I was able to make significant changes and map out areas that still need improvement. This is the equivalent of logging those calories and then watching the weight drop off. I was able to increase my savings from $0/month to over $700/month. That’s a diet I can stick to!

Action Steps

Map out those finances! You can do it!

  • Make categories of your common expenses and take a look at your totals.
  • Do any of these surprise you?
  • Can you think of ways to make improvements?
  • Take three months to monitor your changes and make a game out of how much money you can save yourself.
  • Be sure to take that extra money left over and move it into another account so that you aren’t tempted to spend it.
  • If you try cutting out an expense, like your morning latte, and find that this little joy is missed dearly and the lack of that latte is sucking the fun out of your day, then that’s okay! Add that expense back in. We all have things that make up happy in life. Some things can be replaced with more frugal alternatives, some things can’t. There is a reason this blog is called FI & Wine. I love wine and I wouldn’t give it up just to save money every month. This a simple pleasure that deserves to be there. Find something else to cut out!
  • I’d love to hear how it goes! Leave any questions or give us an update in the comments below on what you learned after tracking your finances!

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How To Save Money by Tracking Your Finances | SStoFI (3)

How To Save Money by Tracking Your Finances | SStoFI (2024)

FAQs

How do I track my spending to save money? ›

Read on for five ideas to try.
  1. Open separate bank accounts. If you're a visual person, compartmentalizing your money may help you track your spending. ...
  2. Download an app. ...
  3. Label envelopes. ...
  4. Break out the pen and paper. ...
  5. Create a spreadsheet.

What will keeping track of your finances help you do? ›

Tracking your spending can help you bridge the gap between your budget goals and your actual spending. Staying aware of your finances, spending less than you earn, avoiding debt and building savings are all key money habits that can help you build up financial stability and grow wealth over time.

How do you track money efficiently? ›

Keep a separate money calendar and put it to work to track your spending. Use it to jot down daily, weekly, and monthly expenses as they occur. With this method, you'll be able to quickly spot spending trends and opportunities to save money.

What is tracking spending? ›

Expense tracking means recording all your expenditures so you have a clear and detailed understanding of your budget.

What is the 50 30 20 rule? ›

The 50-30-20 rule recommends putting 50% of your money toward needs, 30% toward wants, and 20% toward savings. The savings category also includes money you will need to realize your future goals.

How do you manage your finances daily? ›

Check your bank balance at a regular, set time so you know what you're spending your money on and how much you have left. Build money tasks into your daily or weekly routine. You could allocate a set amount of regular time to think about any tasks you need to do around money, for example paying bills.

What is the most important tool for managing finances? ›

Money Dashboard is considered to be a pioneer in personal finance and budgeting tools. The platform helps its users to understand and manage their financial expenses. On the Money Dashboard, the users can easily categorize the spending by proper tracking across all the accounts.

What is your biggest financial goal? ›

Long-Term Financial Goals. The biggest long-term financial goal for most people is saving enough money to retire. The common rule of thumb is that you should save 10% to 15% of every paycheck in a tax-advantaged retirement account like a 401(k) or 403(b), if you have access to one, or a traditional IRA or Roth IRA.

What are the 5 basics of personal finance? ›

There's plenty to learn about personal financial topics, but breaking them down can help simplify things. To start expanding your financial literacy, consider these five areas: budgeting, building and improving credit, saving, borrowing and repaying debt, and investing.

Why can't I save money? ›

Lack of a measurable savings goal

Some people's savings plans consist of this: get paid, pay the bills, spend like they normally do, and save whatever's left. What if you could do things a little smarter? Saving money is just like any other goal: it's much easier to achieve it if you specify a target to reach.

How to keep track of monthly bills? ›

Use an app, spreadsheet or even a notebook; just make sure you can see all of your bills in one place. This will help you keep track of them and can serve as a checklist each month to be sure you don't miss any payments. This list can even become the foundation of a budget if you don't already have one.

How much should you save a month? ›

At least 20% of your income should go towards savings. Meanwhile, another 50% (maximum) should go toward necessities, while 30% goes toward discretionary items. This is called the 50/30/20 rule of thumb, and it provides a quick and easy way for you to budget your money.

How to make a financial plan? ›

Personalized financial planning explained step-by-step
  1. When it comes to life's biggest moments, you probably had a plan. ...
  2. Set financial goals. ...
  3. Follow a budget. ...
  4. Build an emergency fund. ...
  5. Manage debt. ...
  6. Protect with insurance. ...
  7. Plan for taxes. ...
  8. Plan for retirement.
May 10, 2024

Which has the best system for keeping track of your spending? ›

PocketGuard is best for you if you want to keep track of how much money you have left to spend after paying your bills and other expenses.

What is the best app to keep track of spending? ›

Summary of Best Expense Tracker Apps:
Sr. No.App NamePlay Store Ratings
1Jupiter.Money4.4
2Wallet: Budget Expense Tracker4.6
3Day-to-day Expenses4.5
4FinArt – Expense Tracker4.5
8 more rows
Feb 29, 2024

Is there an app that tracks all spending? ›

Budget Card is a personal finance app for spending tracking, budget planning and money saving. It is free to use, no ads, no privacy peeping. - Budget Planning: set up budget for ledger, categories and sub-categories.

Is there an app that tracks money spending? ›

Mint is your personal finance manager and bill tracker - it helps you track expenses, transactions, monthly budgets, account balances, subscriptions, expenses and taxes. We calculate your net worth and spending trends and help you with your budget plan.

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