Budgeting and How to Track Expenses

This is part 1 in a series of 3 about budgeting and how to track expenses. The second post can be found here “Budgeting and How to Track Expenses Part 2” and the third can be found here “Budgeting and How to Track Expenses Part 3“. Go Gingham: Budgeting and how to track expensesBefore sharing ways to reduce your FAITH (food, apparel, insurance, transportation, and housing) expenses, we have to start at the beginning: how to track expenses, otherwise known as “spending.” While many consider this “budgeting” I like to simplify and call it what it is: keeping track of how much money is being spent.

How you track your spending is key to managing your expenses. If you don’t know how much you’re spending (and on what), you can’t easily make improvements. You can begin to track your spending today. Grab your bank statements, credit card statements, and check register and track your spending for the previous 6-months or 12-months. You can do this in a short period of time and see on what and where you’ve been spending your money.

Budgeting and how to track expenses

  1. Make it easy.
  2. Put expenses in buckets or categories the way they’re purchased.
  3. Don’t get hung up on details – yet.
  4. Automate, website, apps – later.

Go Gingham Approved

1. Make it easy to get the information: Tracking your expenses is so much easier if you have just one checking account and one credit card. Whatever you can do to consolidate your accounts will pay off big time. Not only will you have an easier time tracking your expenses with one checking account and one credit card but you will save money on your banking and credit card fees.

Bottom line: The easier it is to get to your spending information (whether it be bank statements, credit card statements or your check register) the easier it is to track and the more likely you are to actually track it.

2. Put expenses in buckets or categories the way they’re purchased: When you put things in categories based on how you buy them (say for example, groceries and cleaning supplies at the same store), it’s going to be that much easier to get the information to divide it into meaningful categories.

Bottom line: all spending has to be put in a category and it doesn’t necessarily matter which category it goes into as long as you’re consistent.

Remember, for this exercise you’re not itemizing your individual grocery bill. If you shop at Safeway, Target, Costco, and Trader Joe’s in a month, put the total of ALL of those receipts in your monthly FOOD category. It’s not worth the time to subtract out cleaning supplies or toilet paper from your FOOD category, remember, they have to go somewhere!

3. Don’t get hung up on details – yet: By limiting your expense categories to a few (but meaningful and useful), you can more easily and quickly get your arms around your spending, without getting all twisted up in the details. (It helps me to write down the categories so I can refer back to them.)

Because I like to keep things simple, I have limited our spending categories to 5 – FAITH (food, apparel, insurance, transportation, and housing).

Bottom line: Don’t break your categories down too small. The money spent has to go into a category.

4. Automate, website, apps – later: I can’t emphasize this enough, but do this process manually, first. Then, once you’ve come to a good understanding of what you are spending and where, you can look into seeing what applications might help speed the process. But, don’t confuse speedier with better. By using a website, software, etc., you may make the process “quicker” but at the expense of better understanding of your actual spending.

Bottom line: Get your hands a little dirty and get the benefits of seeing your spending close up, without the anesthetizing impact of some application getting in between.

The first step in managing your expenses is to track your spending. You can easily make improvements today and you don’t need fancy software to do it. Keep it simple and make your categories easy. Just remember FAITH and it will help when assigning expenses to categories.

How do you track your spending each month? Are you spending more than you’d like?

Go Gingham related links:

Just balance that checkbook! You can do it!
What does it mean to budget? Find out here
Frugal living is the key to saving
The problem with budgeting – yes, the problem!
How finances figure in frugality
Budgeting and how to track expenses – Part 2
Budgeting and how to track expenses – Part 3


Check out this article in The Wall Street Journal – “Seven Resolutions to Get your Nest Egg in Shape” by Anne Tergesen. Guess what’s number 1 on the list? Track spending.

14 thoughts on “Budgeting and How to Track Expenses

    1. Allegra,
      Great question! In general, fun, entertainment, and vacation go into FOOD because mostly, those activities revolve around eating and feeding our family. Later, when my husband and I enter all of the expenses into our spreadsheet, we pull out the big glaring expenses (for example “airline tickets”) and put those in another category titled “other.” I will cover this in an upcoming post, too.
      The important thing is that everything go into a category and very few items get piled into the “other” category.
      Thanks for reading and asking a good question.


  1. I keep an Excel spreadsheet which I download all my Visa statements into (one credit card = easy). I keep one spreadsheet per calendar year, and categorize each expenditure by family member or “All” (the majority), and then by sub-category (groceries, eating out, healthcare, travel, entertainment, hobbies, cars, pets, etc.). Then I “pivot table” the data so I have a nice neat sheet with the monthly numbers for each category and sub-category. Yeah, I’m a geek.

    I separate “wine/alcohol” and “eating out” from “groceries” because they are our biggest luxury expenditures. They are easier to control when I can see them separately.


    1. Liana! Great job on this budget tracking. You are right “once credit card = easy” when it comes to tracking expenses. The same is true about bank accounts as well. We love geeks!


  2. We use Quicken and have for many, many years b/c my husband, too, is a geek. Turns out geeks come in handy for things like budgeting! The one thing we did wrong when we started so long ago was to make too many subcategories. We’re kind of in too deep now to change, but I would pare those back were I starting now. Maybe not to five, but less than we have currently. The good news is, we can do some serious anlysis this way. 🙂 Great tips as usual, Sara. Has Bill George seen this site?


    1. EFB, yes, it is true. Geeks are handy! More geek love 🙂
      Your point: “The one thing we did wrong when we started so long ago was to make too many subcategories. We’re kind of in too deep now to change, but I would pare those back were I starting now” is very true. Not getting too caught up in lots of categories keeps it simple so it’s easy to do.
      Thanks, Erin! Have Mr. George sign up for my email updates, please! 😉


  3. Sara, I love how easy you make things when you break them down into simple steps. I get so frustrated with getting Quicken working right, that I lose sight of the goal – just keeping track of what I spend. Thanks for reminding me!


    1. Thanks, Annie! I like to keep KISS in mind – keep it simple, stupid – for myself. If something is easy, I’ll do it. When it’s difficult or a big hassle, it’s more difficult. Something like tracking how much you spend needs to be super-duper easy.
      And you’re right – keeping the goal in mind is important here. Thanks!


  4. We’ve tried so many times to keep a budget online somewhere, or in a spreadsheet but it still doesn’t work right. Do you suggest anything for basic, really basic hand to paper type methods?


    1. Isra,
      I think the best way to start out is to write it out on a piece of paper. Take a lined sheet of paper, turn it on its side. Put months at the top and categories down the left. Just total as you go.
      This doesn’t have to be fancy and I mentioned above is best when it’s super easy. KISS is my thinking – keep it simple, stupid. It’s the only way to tackle this and stick to it.
      It also helps to only have 1 credit card and 1 checking account. That way you don’t have to add from multiple places.
      More is coming on this, Isra! Thanks for asking. 🙂


  5. My budget tracking is fairly simple — envelopes for discretionary items, better known as “feel good spending money,” which some folks call “blow money.”

    10 to 20 % of all incoming income (be it a gift, or wages), goes into a savings account (or a liquid CD or a CD with deposit privileges). That money is not to be touched, under any circumstance — only for extreme emergencies.

    The rest is for the necessities — utilities (which have gone up), food (which has gone up), mortgage (which has gone up because of ESCROW), medical, insurance (home, health, car). These items are priorities — they must be paid. Hard to live without water and electricity and heat. These are NUMBER ONE (after the 10% that goes into savings).

    Buying household and personal items (furniture, appliances, bedding, etc) are purchased only if there is money after the savings account and necessities have been dealt with.

    The envelope contains $100 in cash to be used for spending as one wishes — gas for the car (I know, that’s life on the edge), a meal in a restaurant (ever since I started watching Dirty Dining, I hate to eat anywhere but at home), or a movie, or…. Once it is gone for the month, that’s it. Generally I have been able to not spend all of it which then goes into the savings pile.

    With the savings, I have in the past(with better rates), laddered CDs to avoid touching the money for stuff that gathers dust around the house. As I get older, I hate spending money on stuff that gathers dust and not interest…..

    That’s my HUMAN TIES (Household, Utilities, Mortgage, Apparel, Nutrition (food), Transport, Insurance, Entertainment, Savings).

    I scrutinize all bills that come in — credit card, phone, medical, etc. Any problems (and there are some that pop up from time to time) I deal with right away.

    Since I use only one credit card, it makes it easy to analyze spending habits and to track where the money went. If it is not a Number One priority item, I have to think twice before making a purchase.

    I use a checking account for spending, a savings account for DO NOT TOUCH THIS MONEY.

    Water, Electricity, Garbage, Heating, insurance, and telephone are all bills I wish would go down. I have yet to find the magic wand to keep those expenses down. The more these rise, the less that is available for the household and personal item categories.


  6. Sue,
    This is great and I love your acronym! You’re smart to only have one credit card because it is so much easier to analyze and review.
    I (we, meaning my husband and I) only have one checking account for all of our household expenses. It’s so much easier that way.
    And, I agree with you that there should be an easier way to lower utility expenses – especially that water bill! It drives me crazy when we find a way to reduce consumption, the rates go up.
    Thanks for sharing this, Sue.


  7. Hi Sara,

    You mentioned you use one checking and one credit card between you and your husband. How do you utilize those two things? For example, do you use the credit card for ALL purchases and then just pay bills out of the checking? My husband and I used to have one checkin but then we realized when we spent money we were taping into our bill money.


    1. Hi Danielle,
      Yes, we do use the same credit card and checking account. The way it works is we have really whittled down our spending to essentials or needs only. We do have access to cash that comes in handy when there is a “surprise” like car needs fixing or water heater needs replacing.
      And, we have a credit card that pays rewards – in travel – so using our credit card and paying it off every month helps our family travel, too.
      Thanks, Danielle! Good luck! Can’t wait to hear how it goes.


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