Why It’s Important to Track Your Spending & How to Do It

Something that I’ve become very passionate about lately is the importance of tracking your spending.

And the big reason is because I never used to track my spending. I would always be in awe of other personal finance bloggers who shared their spending reports so openly on their blogs, and was a bit ashamed that not only did I not share any of my own numbers on my blog, I didn’t even have the data to share.

How to Track Your Spending

But that all changes today! I’m actually sharing some of my raw numbers to give you a peek into what my personal spending looks like.

Before I get to those numbers though, I want to go back a bit and share why I’ve changed my mind about tracking my spending and why it’s become a really important part of my money management practice.

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Tracking Your Spending Is the Only Way to Get Clarity with Your Money

As I mentioned, I never used to track my spending. I’ve always had a budget since my mid-20s, but my strategy for not overspending and staying on budget looked like this:

  1. Pay myself first (allocate my net income to my savings goals first)
  2. Pay my fixed expenses second (allocate my net income to my bills & fixed living expenses second)
  3. Spend whatever was leftover (allocate the rest of my net income to my variable expenses like eating out, clothing, entertainment, and other wants or nice-to-haves)

This is still a fine strategy if you’re just starting out or want an easy way to reign in your spending. It focuses on your savings goals first, then paying your bills, then allows you to have some fun with whatever money is leftover.

The one thing it doesn’t help you with though is giving you a clear idea of what your spending patterns are. Sure, you’ll know what your fixed expenses are (ie. rent, mortgage, car payments, phone bill, etc…), but as for your variable expenses (which are usually what you tend to overspend on), you’ll only have a vague idea of where your money is going.

Something I used to always tell myself was that I didn’t feel like I spent that much money. Then I’d look at my credit card bill and be in shock that I owed $500! But I didn’t remember going to the mall or swiping my credit card like a crazed shopaholic, so what the hell happened?

I’d always assume the worst and think that someone stole my credit card, but before calling my credit card company to complain, I’d take a good look at my statement and realize that, yup, I did spend all that money. It would generally look like $50 for dinner here, $13 on beauty products there, and on and on until it totalled $500. Sound familiar?

It May Not Be Fun to Track Your Spending, But the Benefits Are Undeniable

Well, eventually I got sick of this. I felt like even though I tried my best to live within my means, because I didn’t have a clear idea of what I was spending my money on in real-time, I didn’t truly have control over my finances.

It especially became apparent that I needed to change things up when I started becoming really meticulous with tracking my business expenses. Even when my business was just a side hustle, I would track every single business purchase and keep the receipts so I could claim them on my taxes.

You’d think that getting into this habit would mean I would naturally do the same with my personal finances, but it wasn’t until last January that I started tracking my personal spending. That’s right, it took me 5 years from the time I started blogging about personal finance to start tracking my own spending (proof that it’s never too late to start!).

A big reason for that is, well, I was newly self-employed and was terrified that I would run out of money! I had an idea of how much I could earn working for myself, but I was afraid of the worst happening and me not making enough money to survive off of.

I did have a fairly cushy emergency fund, but to be safe I wanted to live well below my means until I had a more steady stream of income. To help me with this, I started tracking my personal spending, my husband and I’s joint spending, and I got my husband to track his personal spending too.

It was hard at first, because it’s not exactly fun to track every dollar, but after a few months my husband and I started to see the benefits of doing this. Not only did we see in black and white where our money was going, we also had the hard data to help us change our bad spending habits. It also really opened up the conversation about whether or not our spending aligned with our values (which I talked a bit about last week).

Tracking Your Spending Will Also Show You the Root Problem of Why You’re Overspending

What we found out was a lot of our spending did not align with our values. Moreover, when we did spend a lot in certain categories (ie. clothes shopping, take-out, alcohol), it was because we were stressed, overworked or just unmotivated to stick to our budget.

So really, the problem wasn’t just that we were just spending too much and we needed to stop. The problem was that there wasn’t enough balance in our lives. We weren’t using our time efficiently. We were working too much. We were spending our money on things to make us feel better, but really what we should have been doing is focusing on eating healthier, going to bed at a reasonable time, working out, practicing meditation, limiting our screen time and so on.

Tracking our spending made us realize that we weren’t actually living the lives we wanted to live. Part of the reason I became self-employed was to have more freedom with my time and more balance in my life. And the numbers showed that’s not at all what I was doing.

Luckily, because we now have all that data, we’re able to change course accordingly. Now, we cook almost every single meal at home, and limit take-out to one or two times per month. For alcohol, we’ve cut back on that quite a bit, and have even been doing a sober January this month (with the exception of one bottle of wine shared between us). For clothes shopping, which I really didn’t think I did at all last year (but as you can see in my video, I did a lot of), I’m planning on not adding any new clothes to my wardrobe until the summer, unless it’s for a business engagement (I do still need a few more blouses and blazers).

What I Spent My Money on in 2017

Alright, I promised to reveal my numbers, so here goes! And full disclosure, this is just my personal spending, this does not include my joint spending with my husband or my business expenses.

To see what I spent month over month, watch my video included above.

Expenses Cost
Telecom – Cell Phone $ 1,326.42
Personal Care – Clothing $ 1,305.05
Personal Care – Beauty $ 1,215.18
Food – Take Out $ 624.01
Gifts $ 580.60
Personal Care – Other $ 371.86
Transportation – Public Transit $ 323.25
Food – Dining Out $ 318.69
Entertainment – Other $ 306.04
Personal Care – Hair $ 262.66
Food – Alcohol $ 214.32
Charity – Donation $ 210.00
Transportation – Rideshare $ 205.48
Personal Care – Pharma/Medical $ 187.00
Personal Care – Counselling/Therapy $ 160.00
Food – Eating Out $ 157.57
Home – Household Supplies $ 153.51
Travel $ 147.96
Personal Care – Fitness $ 135.84
Food – Groceries $ 114.73
Bank Fee $ 78.65
Misc $ 39.00
Travel – Food/Alcohol $ 26.98
Home – Groceries $ 26.77
Cash withdrawal $ 20.00
Entertainment – Music Streaming $ 18.53
Transportation – Taxi $ 14.25
Travel – Souvenirs $ 8.61
Debt – Other $ 5.00
Cheque for braces $ 2.00
 Total $ 8,464.80

As you can see, I apparently spent a lot of money on clothing and beauty, which was a big shock to me because I really don’t value either of those things. My biggest values are travel, experiences and food (though I did spend a lot on food), so this has definitely made me more aware that I need to cut down on my clothing and beauty spending.

How I Track My Spending in Less Than 30 Minutes Per Month

In case you’re wondering how I track my spending, I share more in my video, but it’s really very simple. I don’t use any apps, I do it all manually. And still, it only takes me 30 minutes (or less) per month to do.

My strategy is that I rarely use cash, I mainly use debit or credit for all of my purchases. Because I do that, I can easily download all of my expenses from my bank or credit card account, then copy and paste into the spending tracker tab of my budget. I then divide those expenses into fixed expenses and variable expenses, categorize them, then their totals for each month populate automatically.

That’s it! It’s super easy, so not painful to do, and I honestly like doing it this way. I’ve tried a number of apps like Mint in the past, but eventually I realized that doing it manually worked best for me. I’m not saying that using an app to track your spending is the wrong way to do it (there’s no wrong way to track your spending, as long as you get the data in one way or another), I’m just saying I’ve tried a few apps, and doing it manually turned out to be my preferred method of tracking my spending.

Well, that’s it from me! I can’t believe I actually shared my spending on the blog, because after 6 years of blogging I’ve never revealed those numbers before. But, I hope that by sharing that info, it’ll help you get an idea of how other people spend their money and inspire you to track your spending too.

Do you track your spending? Why or why not, and how do you track it?

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Showing 6 comments
  • JoeHx
    Reply

    Hey, I think tracking my spending is fun! Then again, I use an app (Mint) to link to my bank accounts, so most of it is automated. It does help me notice bad habits and thus work on them, saving money in the long run!

    • Jessica Moorhouse
      Reply

      I feel like you and me are probably the only people in the world (excluding every other personal finance blogger out there) who would say tracking your spending is fun lol. But whatever, I wear my money nerdness like a badge of honour!

  • Prairie Angel
    Reply

    I totally track my spending and it has been so worth it!

    Jessica I applaud you for sharing your personal spending so openly! It helps to really break down the perceived taboos of talking about money. There have been some of your podcasts where I wish you had shared your personal numbers in the past, so kudos for doing it on spending! If you can share openly I hope it encourages others to do so in their daily lives. Great video!

    • Jessica Moorhouse
      Reply

      It wasn’t easy to come to the decision to share these numbers, but I’m glad I did, especially if it can help someone else that just needs to see an example of someone else’s spending. Thanks for the comment!

  • Scott
    Reply

    If your banking with RBC they have a myfinancetracker.
    It is customizable to view one month or year or whatever. It only tracks what you are doing with RBC though. I check it every once in a while. Usually I will look at it when I am setting up or adjusting the budget.

    • Jessica Moorhouse
      Reply

      They do indeed! But yes, if you bank at other institutions or have credit cards elsewhere, then you need to track those separately.

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