Budgets

Budgeting Basics: An Expense Tracker That Works

Tracking your expenses is an important part of setting up a budget that is effective at predicting future expenditures and educating you on your current progress. There are a few different styles that people employ to do this, but I don’t want to get into that discussion now. What I want to do is to show you a way to gather your income and expense information is such a way that you can completely customize that way that it is displayed for you.

The reason I think that this is important is because many of the expenses that we incur during our lives are rarely one shot deals. Most budgets I have seen are single line items. They look something like this:

Pretty Budget

Very pretty, but lacking in some practical punch. You see very few people spend all the money they have set aside for each category in a single pop. Most people exhaust the funds set aside for each line item gradually over time. A classic case in point is grocery shopping. If you are like my wife and I your food budget of $160 is spread out over the entire month. My wife makes a weekly shopping trip on Wednesdays and buys our food for the entire week (and often times more than a week). She even shops at multiple stores, often bringing our total receipt count up to 3 per Wednesday.1 If we had to add all these trips up into one cell that would be terribly inefficient and the equation would look gawd-awful.

Gawd Awful Equation

Imagine having to look through that for errors. It’s giving me the heebie-jeebies just looking at it.

Here is the fix that I have used to make my life easier and that I hope will make your life easier too: track your expenses in a list form. It is simple, efficient, and really opens up some cool possibilities in terms of analysis. After all, that is why we budget – to keep more of what we have earned to promote social justice … er, I mean retire early.2

The way I make a list of my income and expense looks just like this:

Expense and Income Tracker

Not very pretty, but pretty functional if you ask me. Let me break it down for you how it works:

(A) This is the date on which you made the transaction. This isn’t that important unless you do a lot of your banking online and maybe even use your online statements as your receipt receptacle. I do this even though I probably shouldn’t. Recording the date at the very least helps you order your information and give you points of reference – which is a good thing if you ask me.
(B) I like to record the store at which I made the purchase or the source of my income. That way it is easier to find the receipt or scan the online receipt receptacle for transactions made on a certain date at a certain store. It is not necessary, but I like it a lot.
(C) Here you put down the price that you paid for something or the wages you received. This is obviously important and you should obviously do this step. I like to put income as positive numbers and expense as negative numbers, but I can see an argument for doing exactly the opposite3
(D) D is the real power behind recording your expenses in a list form. Here is where you put the category for every expense that you have. If I go shopping on the 11th at my local grocery store to buy food I would put “food” in this column. If it was a bill I paid I can put “bills” or “utilities” depending on how I chose to categorize my expenses – for simplicities sake I choose to categorize it as bills. Pretty self-explanatory, but crucial.
(E) In this column I put random information that might be useful, like confirmation numbers. This is not a necessary field.

Again, (D) is really the power in making the expense tracker that works. It will enable you to make the pretty spreadsheet that we saw earlier, but this pretty spreadsheet will have power.

Then, to put an end to the tracking spreadsheet you will want to us the SUM function available in the major spreadsheet applications (both Excel and Open Office Calculate). It should look something like this:

=SUM(D2:D70)

The ‘D2′ is the first cell in the range and ‘D70′ is the last cell in the range. The ‘:’ is there to let your spreadsheet application know that it should be adding all the values in the cells between D2 and D70. You can put this equation at the end of the list or you can put it off to the side. It doesn’t really matter just as long as it works best for you.

You can find a starter template that I created with Google Docs here. Just copy and paste it into your spreadsheet application of choice and it should work (including the equations) just fine. Or you can download the Expense Tracker for Excel here: ExpenseTracker.xls

If you have any questions about this please feel free to ask them or use our contact form. How does anyone else track their expenses? I’d love to hear how you do it. Also, Stephanie over at Poorer Than You is holding a “Know Where the Money Goes” Challenge. 4 You could use this template to know where all that money goes.

  1. In case someone will decry this as terribly inefficient all three stores are right next to each other – it is the perfect set-up []
  2. But why not pinch pennies to give to those that really need your money more than you do? Isn’t that a good reason to budget? Check out one possibility here: Invisible Children []
  3. If you put expenses as positives you will have to enter less “-” in front of your numbers, thus saving you precious key strokes. You just might delay the onset of carpel tunnel syndrome for a minute or too. []
  4. She is holding this challenge even though “[she doesn't] have a budget.” Is she changing her tune? The universe waits in silence … well, probably not. []

3 Comments