Tracking Your Spending: How to Analyze Your Expenses and Have Financial Discipline

Tracking how much money comes in and how much goes out is essential nowadays. Adding this habit into your daily routine could be life saving for many people, especially ones who need more structuring and awareness of how much they are spending. Nevertheless, with the inflation prices skyrocketing at this day and time, this is a great tip for anyone who has finances to manage and wants to keep track of them.

Tracking your spending is the first step towards a more stable financial state; whether your intentions are to save up for the future or you just want to know your own habits. People in the US spend money on different things, but the three main categories which every adult spends on are food and accommodation, transportation and entertainment.

In today's article, we will go through all three of them and provide tips on how to efficiently analyze your expenses for the sake of financial stability. But first, let’s briefly answer the question some of you might have on why tracking your spending is of importance.

Why tracking?

Well, primarily, by tracking your spending you get insights on your own behaviors. This process will allow you to have a bigger picture on areas where you might be overspending, and once you identify those, you can adjust so that in the end your expenses align with your priorities. Once you do so, there is nothing but good things coming your way. That means you are able to budget, save and invest the way you want to for your future.

Food and accommodation

We will start off with probably the most essential part of our lives, which we simply cannot escape when it comes to spending, and that is food and accommodation. For obvious reasons, people cannot live without eating and drinking, so one should inevitably allocate some out of the budget for this category. Similarly, most people rent out their accommodation, or pay their mortgage.

According to Statista, adults either rent or own the place they are living in. This report shows that in Europe, specifically Switzerland and Germany, has a higher percentage of renters (68% and 64%). On the other hand, the US has more homeowners (58%), and participants from Russia and China reported owning their homes more than renting (87% and 83%).

That being said, allocating a certain amount of rent or mortgage should be the first step towards managing your portfolio. Next, you also have to think of food and have a certain amount of money ready for that. In regards to buying food items at the supermarket, you could take advantage of some tips and tricks such as using coupons, becoming part of the loyalty program, comparing prices between stores and so forth.

That being said, if you track your expenses efficiently, the money you spend on these two categories should normally not exceed the amount you have initially apportioned.

Entertainment

Entertainment comes second in the list and covers most of the activities that we do for fun. In the entertainment category, we are talking about money spent on streaming services, gaming, movies, concerts and other activities which technically are not essential and could be considered a luxury. Nevertheless, entertainment is a crucial part of making life more relaxing and easier, especially in times of stress and burnout.

In terms of this category, the main advice people give is to set a budget and stay within that budget. One way of doing that is by setting aside, for example $200, at the beginning of the month for entertainment and then using that money only when purchasing something for entertainment purposes. Nevertheless, people are mostly spending more and more money on entertainment.

To illustrate, let’s take the expenses of a person who spends their free time gaming on the internet. In games, such as CS: GO, Fortnite or Roblox, there are various in-game items that you can buy. Those items might not seem expensive at first sight, however if you keep purchasing new ones every day, then surely you will spend $200 alone on gaming. If that sounds like you and you would like to know for example how to see how much you've spent on CS: GO, then keep reading.

You can either track this money you spend manually or automatically. However, tracking it manually might be more time consuming. On a recent podcast episode of “Money Talk with Tiff”, we spoke with expert Darius Smith about the importance of automating your expenses as it is easier and of course more convenient. There are plenty of apps which were developed to help you keep track of your expenses, whether you are a small business owner, investor or simply want to track your personal spending. In that case, a simple Google search can give you options that you can use.

Transport

Last but not least, adults also spend a lot of money on transport. Although there are multiple attempts by governments and cities to further encourage people to use commuting methods which are more environmentally friendly, people still use mostly cars to drive to their respective destinations. Most of this movement is done for school or work.

In a report from Statista, we see that in 2022, 75% of Americans used their own car for commuting. They are followed by Germans with 65% and Chinese with 64%. The UK comes quickly after with 62%, followed by Brazil with 56% and South Korea with 53%.

In terms of transportation, it is undoubtedly advised that people use other methods rather than cars because cars emit a lot of CO2s into the air. Not only that, but people would also spend less money when using public transport or bikes when traveling to work. So, transport is definitely one of the categories to keep an eye on when tracking your spending. If you see that gas is taking a considerable amount out of your money monthly, then opt for other commuting methods. Your portfolio (and Earth itself) will definitely thank you later!