7 Common Mistakes People Make When Tracking Monthly Expenses

It’s a very good idea to keep your monthly expenses under control. There’s always the temptation to spend more and more. But since we all have a limited income to work with, we need to make certain sacrifices. And that’s why it’s important to track our monthly expenses, just to ensure that nothing goes overboard. Plus, when you track expenses, it becomes easier to figure out what stuff is unnecessary and which can be removed from your daily/monthly expense list.

Not keeping track of expenses

That’s a major issue, because if you end up not tracking expenses, that leads to you spending without control. You always want to track any expense, no matter if we talk about a snack, a cup of coffee, subscriptions or even parking fees. Track all of them, so you can figure out what your monthly expenses are.

Another good idea is to use a utility bill generator to monitor your utility bills and figure out if you can save some money there as well. How can you solve this issue? A lot of the time, the best approach is to use mobile budgeting apps, tools like Spendee, Mint, YNAB or Pocket Guard can be highly effective, and they will provide a more consistent result.

These apps will help you not only track, but also categorize expenses. And as you do that, it becomes a lot easier to plan your income and not worry about long term expenses. It’s a great idea to consider, and the best part is that it will help streamline the process much more than expected.

Forgetting annual or irregular expenses

Certain expenses will only appear manually, such as insurance premiums, property taxes, car maintenance and so on. They will disrupt your budget, so it’s a very good idea to be prepared for them. However, if you forget about them, that can become quite the issue. A very good rule of thumb with these things is to also use budgeting tools like YNAB or GoodBudget. The role of these apps is to help you optimize your budget, ensure that you receive reminders when it comes to expenses, and overall, it will lead to a great result, which is something you have to consider.

Not categorizing your expenses

If you just track expenses in a single bunch, you will end up with confusion. The best approach is to establish categories and ensure that all your expenses are tracked appropriately. Not only will that help quite a lot, it will also eliminate many problems and issues that could arise.

The reason you want to categorize is because it will help you identify spending patterns. It will also make it much easier to review monthly expenses. And, of course, with that information, you can make important lifestyle changes. Even if it might not seem mandatory at first, categorization offers great insight into your current lifestyle. It will be easier to narrow down what to change and what expenses are indeed mandatory. What you’ll notice is that most expenses are things that you can avoid, so you should totally keep that in mind.

Skipping cash transactions

Some people just track online/card purchases and dismiss cash transactions. But the truth is that those are expenses, just like all the others. If you ignore them, then your financial information is incorrect. If you only have tools that track your online expenses, make sure that they offer a way to manually introduce expenses, where possible.

If you don’t have a tool that can also do that, manually record transactions on a notebook, if necessary. You should also consider Monefy, Spendee or GoodBudget. These are excellent tools to keep in mind, and they can provide exceptional results, along with an outstanding result every single time.

You can use the envelope method to budget everything and it can help you save money. Plus, you can track all the expenses in a notebook. That way, even if you have a lot of cash transactions, you can still monitor them without any problems.

Not analyzing or reviewing expense data

Even if you use budget trackers and tools to help manage/track your income, it doesn’t help if you rarely analyze your expense data. Sure, it’s great if you track expenses, but it won’t help you if you just ignore those things once they are tracked. The idea is to use that data, figure out what expenses are not necessary and then remove them from your spending habits.

A good approach here is to try and set aside time every month in order to review your total income and expenses. Establish categories and see if there are overspending patterns. If there are, you want to finally address those the best way you possibly can.

Relying just on paper logs or memory

As we mentioned earlier, having a way to track cash transactions via a notebook or manual entries in digital tools can be handy. But at the same time, you can’t just rely on paper logs. Also, you can’t only rely on your memory. It’s very easy to miss or forget stuff, so the best approach here is to use dedicated tools.

There are lots of different apps and tools you need to keep in mind here, from Emma to Toshi Finance or Mint. Using app notifications as the means to receive expense updates comes in handy. That way, you won’t have to worry about expenses taking money randomly out of your account, which is extremely important to take into consideration here.

Not having a goal or a purpose

We should all have financial goals that we strive towards. Not having a goal will make you feel meaningless and a lot of the time, it also brings issues like burnout. You do want to establish financial goals, because they will keep you focused and motivated. Link goals to certain rewards, as that will help boost your motivation.

Apps like YNAB or Rocket Money help you establish goals and also track their progress. You can also use them to identify unnecessary, yet recurring costs. That will make it much easier to manage everything, while saving plenty of time on your side as well.

Bonus: not backing up your data

If you have various documents in a digital format, you always want to create a backup. And that’s because you never know when a hard drive might fail, or when systems might stop working. Having a backup in the cloud is a very good idea.

And we don’t talk just about images here. Having a backup for everything will always come in handy, and it will help alleviate a lot of the pressure. Export some of your monthly reports to PDF if you can, so you can have the entire collection there, when necessary.

Closing thoughts

It’s very easy to make mistakes when it comes to tracking expenses and managing your finances. But that’s why you need to be careful and figure out whether you are making a mistake or not. It’s never easy to handle these problems, but if you do that correctly, it will make the process much easier. We recommend taking your time and making sure that you go through all the ideas above to find a solution for any of the issues you face. In doing so, you will have a much better result than expected!