Have you ever found yourself at the end of the month looking at your bank account and wondering where your last paycheck went? For me that was normal, almost every month I looked at the balance of my bank account and wondered how the hell I managed to spend almost everything I have earned, even though I was careful to avoid big expenses.

At that time, I was reading books talking about personal finance and the importance of saving and investing, especially at my age, and I was amazed and fascinated by how, with discipline combined with a series of simple rules, these results can be achieved.

Fortunately, I have never been a big spender, I always loved simple things, and always enjoyed more experiences rather than material things, but I was always struggling to save money at the end of the month. It was frustrating.

Therefore, to better understand where my hard-earned money was going, I decided to start taking note of every expense I made, firstly by writing them on the notes app of my phone, and then by transcribing them into an Excel spreadsheet.

Then, I divided all my expenses into categories, so that I could have a better understanding of where I was spending my money so that I could solve the problem.

After one or two months, I started seeing some very interesting summary data, and after a brief analysis I found out that even though I was very careful in not making big expenses, the majority of my money went to many small expenses, like subscription fees to magazines, snacks, and coffee.

That shocked me because I had a different perception, I thought that maybe I was spending too much on things like transportation, clothes or dinners. This finding, however, changed my perspective, and it helped me to decide to stop spending money on those unnecessary things.

From that moment, I keep tracking my expenses and analyzing the results at least every month, so that I can make sure to be in line with my budget, and that I am not wasting money on unnecessary things.

Moreover, I continuously try to figure out if there is something I can “cut” from my budget so that I can save more in the next months.

Now I save almost 30% of my annual income, and my goal is to reach 50% this year.

How to effectively track your expenses

Photo by Kaleidico on Unsplash

Now I want to give you some tips on how to start keeping track of your expenses, I have been doing it for three years now, and I have changed many methods along the way.

1- Take note of every purchase

From my experience, the best way to do it is by using your mobile phone, there are several apps that are built specifically to set a budget and tracking expenses. As an alternative, you can use an app to take notes, that is what I did for almost two years, it is simple and easy.

2-Transcribe to a spreadsheet

Then, once or twice a month you should transcribe your expenses from your mobile phone to a spreadsheet. In my opinion, it is useful for two reasons, firstly, by doing this you will read all your expenses and you won’t forget them, secondly, using a spreadsheet to analyze data is a lot better, you can use a lot of tools that help you to better understand how you can improve your spending habits.

This approach is similar to what an entrepreneur that is managing his own company would use to understand how to make his business more efficient and profitable.

3- Group expenditures into categories

I usually group my expenses into 10–15 main categories (car, home, food, etc.), it helps me a lot with the analysis and with budgeting, it takes a bit of time but it is worth it.

4- Analyze your data and set goals

The analysis is very important, it is especially useful after a couple of months when you set a set of goals and every month you have to see whether you are in line with your objectives or not.

Then, usually once a year, I set my goals for the next year, these goals may be general (ex. “spend 10% less than last year”), or for a specific category (ex. “reduce the expenditure on food by 5%”).


Summing up, from my experience the habit of tracking expenses is a key factor for success in personal finance. It is not an easy process, it may be frustrating at times, but in the long run, its effects are evident.

Then, with time, everyone will find the perfect model for them, the one I showed is the model that works very well for me, and that I have refined in the last three years of doing it. However, it should be considered more as a starting point, from which everyone can develop his strategy that works well with his situation.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.