Budgeting and How to Track Expenses Part 2

Budgeting and How to Track Expenses is Part 1 in this series and this is the second or Part 2. The third in this series is “Budgeting and How to Track Expenses Part 3” is the final. Check out Part 1 first – it’s a great place to start the budget and tracking how much money is being spent process.

Go Gingham: Budgeting and how to track expenses part 2

OK, so now you’ve got your check register, credit card and bank statements ready. You’ve decided on your limited categories (you can always add more later) for your expenses. Before we start, this is important to note:

Treat this process like a recipe and read the instructions all the way through first, then go through and follow the steps to completion.

Budgeting and How to Track Expenses Part 2

There are 3 main things that will make this process much easier. If you are doing these things, tracking your expenses will be simpler and save time. If not, don’t worry it’s still possible to do, only a little more involved.

  1. Only have 1 checking account.
  2. Only have 1 credit card, which is paid off every month (or none works, too).
  3. Not paying for household items (or FAITH expenses) out of a home equity line. This contributes to “spending more than you earn” and can more easily lead to trouble. And in this process, will be like having an additional checking account.

Step #1 – Finding TOTAL monthly spending

To find your TOTAL monthly spending, use your checking account register (or bank statement) and add or sum up all outgoing dollar amounts for each calendar month. If you transfer any money to a savings or retirement account (YAY! good for you!) note this amount. All you’re doing here is listing how much has been spent for each of the past 6 to 12 months.

Here’s an example:

Go Gingham Monthly Spending

If you have more than one checking account, sum up all outgoing expenses, as above, then add each of the checking account totals together and put that number into your total money spent.

Your balanced check register is the best place to get these monthly spending numbers. (If you don’t balance your checkbook monthly, you’ll want to read the reasons why you should here.)

You can use your bank statements to find total monthly spending but the bank statements will have less detail. You’ll need the additional details, that are available in your check register, for the next step.

Don’t worry if 2 regular monthly payments or bills get included in one month. That’s the beauty of putting together 6 to 12 months worth; this will all average out in the end.

Congratulations! You’ve completed Step 1. Now you know how much you are spending each month, in total.

Step #2 – Splitting expenses into categories

Things get a little bit trickier here, but not much.


To make this part easier, align your credit card statements with the checking account month in which you wrote the check to pay it. If you do not pay off your credit card (or cards) each month you need to make sure you “categorize” all the expenses on each credit card statement, NOT just the amount you paid that month, otherwise you will not capture the balance that is building up on your credit card account.

Grab your check register and credit card statements because these will have the best details. Choose your spending categories, preferably FAITH, but you can have more. You don’t want there to be too many categories because that makes this more difficult and time consuming.Go Gingham: How to budget and track spending

Remember the FAITH categories are…

  • F – Food
  • A – Apparel – clothing and home decor
  • I – Insurance
  • T – Transportation
  • H – Housing (and utilities)

Begin with your check register first, then, use your credit card statement to provide the details behind the lump sum check amount from when you paid your credit card bill.

With your categories in place, go through each month and sum up the expenses for each category. For example, add up all grocery store and warehouse store receipts, and enter this amount into the “food” category. Don’t worry if you bought toilet paper at the warehouse store and now it’s going into the “food” category. Spending has to go somewhere and categorizing your expenses by the way you purchase them will make this that much easier.

Step #3 – The “Other” Category

Go Gingham: Budgeting and tracking expensesThis is an area where trouble can brew. Lumping everything that doesn’t fit in the FAITH categories here can make the “Other” number huge.  And that can be bad.

Items that did not easily fit into one of the FAITH categories (or whatever you decide to call them – as long as you’re consistent) can get dropped into the “Other” bucket without having to add them all up individually. To do this take the total of your individual FAITH categories and deduct this amount from your monthly spending total from Step #1.

Your defined spending categories should be clear because these will mostly reflect the “Needs” in life while the “Other” category will largely contain more discretionary type spending. This works because the “Need” categories are managed more tactically (for example – price shopping at stores or getting quotes to lower insurance premiums) whereas the types of things that fall into “Other” (sports fees, lessons, travel, hobbies) lend themselves toward more inward looking family and/or couple decisions on what you value or want to prioritize.


Now that you have 6 to 12 months of expenditures categorized, the next step will be understanding and deciding where you’d most like your money to be going.

If you have any questions or need clarification, please leave a comment below. If you’re confused then perhaps someone else is, too.

 What’s your method for tracking spending? Do you review it regularly?

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 1
Budgeting and how to track expenses – Part 3

While any lined paper will do for this, here’s an online resource for printable paper. Printable Paper has “budget” themed paper as well as spending tracking forms.

2 thoughts on “Budgeting and How to Track Expenses Part 2

  1. After years of managing my budget, I basically have boiled things down to necessities and wants. The necessities are those things on which survival is based: Utilities (water, electricity, heating, phone, garbage), Shelter (pesky home mortgage and/or property taxes), Medical (all things medical/dental/vision, including insurance premiums), Transportation (all things related to transportation – car, insurance, gas, bus, repairs), and SAVINGS. These are the MUSTS expenses (medical, utilities, shelter, transport, savings). An shorter version of the HUMAN TIES.
    Everything else is a WANT and wants must be scrutinized as to their necessity. There is no MISC or OTHER category. I tell folks to avoid those two items in their budget. Every dollar allocation must have a name, otherwise the OTHER and MISC category govern all.
    The savings is not a want but a necessity and must be treated as such, otherwise it is too easy to spend it on things of no lasting value. I am always amazed when folks tell me they “invested” money in buying a new car. Wrong, that is not an investment (unless the car is an antique and valued as such), rather it is an expense.
    People over use the word,”investment” rather than an expense. Unless something appreciates in value, it is not an investment, it is an expense. Even investments can loose value. That priceless vase can lose value if it cracks or gets damaged. That house you thought was an investment can lose value and can become a real money pit — crumbling foundation, tree falling on roof, earthquake, flooded basement, leaky plumbing, etc.
    Treat every dollar with respect and evaluate whether you really need to spend or save it. Every decision has its pluses and minuses. I have been known to talk myself out of buying something by just waiting a few days. Do I really need one more pair of shoes, do I really need that cake mix, do I really need that blender, etc. Most often the answer is a “No!”


    1. Sue,
      I completely agree with you that “investment” and automobile don’t really belong together. When I hear that, I cringe.
      The good part is that there is money to be saved in both the “need to live” category as well as the “want” category. Actually, it seems that due to human nature it’s usually easier to reduce the former category while allowing yourself some (albeit small) indulgences in the latter category.
      As always, I appreciate your opinion on this topic and your method for budgeting sounds like it works well for you. Thank you.


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