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Track Your Spending

If you’ve ever been overwhelmed by your financial situation, you know how hopeless it can feel. There’s no worse feeling than wanting desperately to get on a good financial track and not having a clue where to start.

The first step to getting in control of your finances is to learn how to track your spending. If you have no idea where your money is really going, it’s impossible to get control of it and plan for your financial future. 

While the larger journey to Financial Independence is unique and varied for each person, the first step is not: You have to learn to track your spending. This is the number one suggestion of people who have been there, done that, and have complete control of their finances. We help you understand the reasons why you need to track your spending and the methods you can use to do it.

Table Of Contents

What Does It Mean to Track Your Spending?

The idea and practice of following your money may seem like it’s obvious, but many of you starting on the journey to Financial Independence are truly starting from scratch. So we’re starting there too.

Generally, when we talk about managing finances, we talk about doing it on a month-by-month basis. Tracking your spending means understanding exactly what happens with your money each month. You know what is coming in (your income) and what is going out (your expenses).

That’s it. At this stage, we’re not complicating it with anything else. We’re not looking at any money you might have in investments or savings accounts or how big your debts are. That all comes later.

First, you need to understand what comes in and what goes out.

Why Do You Need to Track Your Spending?

There are five reasons why tracking your spending is critical to getting control of your finances and eventually becoming financially independent.

You need to know where your money goes in order to gain control over it.

Far too many people have no idea how much money comes in and how much goes out each month, let alone where it goes when it leaves. In this case, ignorance is not bliss. It can lead to serious financial hardship.

By ignoring your financial situation, you give it power. And it – not you – may determine whether you qualify for a mortgage, travel to see an ill relative, or can even retire one day. Financial knowledge gives you back the power.

It Reveals Spending Habits That Need Work

When you learn to track your spending, you learn to take the blinders off. You learn how much money you spend not just on necessities, but incidentals.

The latte factor is real. If you spend $5 a day on coffee, that’s $150 a month, which is $1,800 a year just on coffee.

If you don’t track your spending, it’s just a cup of coffee each day. When you do track your spending, you realize that daily habit adds up to the cost of a vacation or months of car payments.

Tracking your money helps you to understand where your spending habits can change to better your financial future.

It Helps You Set Reasonable Financial Goals for a Better Future

The path to Financial Independence usually begins when you realize that there are things you want to do with your life that you can’t currently afford to do with your finances as they are.

Learning to track your spending so that you know where your money goes puts you in control. You know how much you can save, which allows you to set reasonable financial goals. Then you can dictate what your future looks like.

It Allows You To Hold Yourself Accountable

When you’re tracking your spending, you are totally aware of exactly where it is. There are no excuses. You own every spending choice you make.

Holding yourself accountable is critical to developing good habits that replace the bad ones. Track your money to watch how your spending habits impact the amount of money you have leftover at the end of each month. As you get serious about Financial Independence, that figure will become more and more important.

It Helps You Avoid Debt

No one loves debt. Then why are so many people knee-deep in it? Because it’s easy to ignore. You get a bill, make a minimum payment, and figure you’re paying off what you owe.

Not always true. Sometimes you’re just paying the interest on what you owe and not even touching the actual debt.

Tracking your spending and forcing yourself to face that number every month makes it impossible to minimize or ignore. The more you track your money, the more you’ll realize you want to look to start saving for your future goals rather than paying off your past indulgences.

How Do You Track Your Spending?

Now that you know why it’s important to follow your money, you need to know how to do it.

Here are four easy ways that you can track your spending.

Excel Spreadsheet

If you like Excel, set up a basic spreadsheet for yourself. Make it easy and use one of the budget templates that Excel has built into it.

Assuming you already have Excel, this option is free. There are paid templates you can purchase, but there are also free ones available. Open Excel, click “New,” type “budget” into the search engine, and select a free option.

ChooseFI Expense Tracker

Because we really want you to succeed on this path to Financial Independence, we built our own free ChooseFI Expense Tracker. It’s set up for you to track every dollar that you earn and spend for three months.

Why 90 days? Because by the time you’ve tracked your spending for three months, you’ll have a really good handle on where your money regularly goes. You’ll start to see your financial habits emerge clearly too. Both are instrumental in getting control of your personal finances and eventually getting on the path to FI.


Mint is a free online budget tracker that allows you to record all of your expenses and income. Then you can chart and graph it so that you can very clearly and easily see where your dollars are going.

You can set up payment alerts, get a warning sent to you when your funds are low, check your credit score, and see your whole financial picture with one quick glance. Once you start making investments, you can track those in Mint as well.

This is a great tool for people who need good visuals of where their money is and need to be able to see it all in one place. Even if you don’t use it when you first start tracking your spending, you may want to consider it as you get into that habit.

What Are the End Results of Tracking Your Spending?

As you start, we want you to know that tracking your spending is often described as both the easiest and the hardest step on the journey to Financial Independence.

As you’ve seen, there are lots of tools out there that make it easy to figure out where your money is going. But once you know where it goes, you’ll also see what habits you need to change in order to truly get control of your finances. That’s the hard part.

When you get a good handle on your money, good things are ready to happen for you. And the first thing? Reduced stress.

Money routinely ranks as the number one stressor in people’s lives. Track your spending and learn how to get in control of it so that Financial Independence and a less stressful life are not only possible for you – but inevitable.

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