Our household uses Google SpreadSheet to track our expenses. Feel Free to download it for your own use.
Why Tracking Expenses
When it comes to personal finances, most experts suggest setting up a budget. I once tried to set up a budget for our family, and it was hard because I actually did not know how much we spent each month. Of course,we know we are living within our means. We pay our bills on time, do not have any credit card debt and have more money stashed away in our joint saving account every month. However, if you ask me how much we spend on groceries each month, I simply don’t know!!
For us, tracking expenses seems to be more important than setting a budget.
Why it is a difficult Task
- I’m not the only one spending money in the family. Dragging another person to track expenses with me is difficult. I don’t think Mr. G is not willing, it’s simply that he doesn’t see any need for it. After all, we are having extra savings every month.
- I’m a bit OCD on properly categorizing expenses. Say, if I go to Costco, some of the purchases are groceries, and some are more discretionary expenses. Should I split up that single Costco charge in my credit card to various categories so I will be more accurate? And if I simply put all of them under grocery, it does not seem to be right. And Plus, if I split the expenses, when I’m matching against the credit card statement, I may need extra mental processing to like the couple lines in the spreadsheet with a single entry in my credit card statement. SO WHAT SHOULD I DO?
- There are expenses that only happen yearly or a couple times a year. Should I evenly divide that expense into each month so that I can have a more accurate monthly expense?
The list can go on and on. When I want to do something, I tend to over analyze the task and OCD on details. Eventually, I will be too overwhelmed, so I will give up.
How I finally make it work
In 2020, I decided to tackle this tracking expenses task. To prevent myself from over complicating the task, I set up the following guidelines.
- Keep it simple.
- It is okay to categorize the whole Costco trip to grocery as long as that trip mainly contains essential purchases. But if I pick up a big ticket item, i.e., an iPad or a Dyson vacuum, I should further divide up the Costco bill to accurately track our expenses. Yet, if Mr. G just gets a pair of docker pants for work, I will not bother with it.
- Do not worry about spreading out the bi-annual auto insurance premium, or the annual term life insurance premium. Just record them as the expenses occur.
- Do not judge when you enter your expense. DO NOT YELL to your husband if he spends $200 on cigars. DO NOT BEAT yourself up for spending too much on that dinner. Simply log ALL your expenses first.
- Have a designated box to dump ALL receipts and packing slips. You do not need to put your expenses in everyday as it probably is too much. Process the box when you have time. In my experience, you can easily enter your expenses when you’re watching TV.
- Keep the expense report online, i.e., on google sheet, making it easier to access and edit the file as well as sharing it with family members.
For our family, I put all expenses into the following main categories:
- Food: grocery and dine-out expenses
- Utilities: cable, internet, cell, water/gas/electricity
- Home-related: mortgages, HOA fees, Lawn care expenses, cleaning crew (if applicable)
- Donation/Gift: Charitable contribution, gifts to family/friends, financial support to parents
- Auto-related: parking, gas, car washes, toll, or car payment (if applicable)
- Child-related: daycare, preschool, extra curricular, supplies
- Travel: air tickets, rental cars, hotels …
- Insurance – auto, health, life, umbrella …
- Health: contact lenses, doctor visits, eye exams …
- Tax: something we all wish we can avoid …
- Investment/Saving: 401K, 529 plan, Traditional/Roth IRA, money stashed away after paying all the expenses and investment.
- Discretionary: shopping in the mall, entertainment
Then, I sub-categorize each main category. For example, I put groceries, dine-out and alcohol under Food. You can subdivide a category in a way that is meaningful to your situation. However, try not to go over the top on the sub-categories.
Discretionary is any expense that we can go by without. Of course, someone can argue that dine-out expenses are totally discretionary. For us, we do enjoy dining out occasionally. And if we are out the whole day with little G, making a meal at home is not that possible. So, I won’t put dine-out under the discretionary category.
If you’re interested, you can download my Google Spreadsheet to start tracking your expenses. Here are some brief instructions on how to use it:
- Overall – Lists all categories and sub-categories that you’re tracking, and it also shows of your monthly and yearly total.
- Jan to Dec – each sheet is where you want to enter your expenses.
As you enter your expenses in the Jan to Dec worksheet, the Overall worksheet will also be updated to keep a total for you. This little spreadsheet has been a great help to our family to keep track of our expenses. It also helps us to be more aware of our discretionary spending. I hope you will find my spreadsheet to be useful. If you are somewhat familiar with Excel, you can easily modify the spreadsheet to suit your situation.
Practical Tips if you are OCD like me
- FSA/HSA or dependent care FSA:
- FSA/ dependent care FSA: I do not enter FSA deductions in the expense even thought they are in my pay statement. I simply enter all expenses that are reimbursable from FSA as time goes by. If I have left over money in FSA and that cannot be rolled over to next year, I will enter it as an expense at the end of the year. Maybe, I should have a stupid-loss category??
- HSA: I use HSA as an investment vehicle, so I enter the HSA deduction in the investment category.
- Investment gain/loss: I only record money I move to the brokerage account as Saving-investment. But I choose not to record any realized loss/gain in the expense report. My goal in the expense report is to get an idea on how I spend my income. But of courses, if your investment income is your major income, you should treat it differently than I do.
- Reward from credit card:
- If I redeem points to cash/gift card, I will put that under Income-misc. And as I use the gift card, I will enter my expense accordingly.
- If I redeem points to air tickets or hotel, I will simply leave it and not enter into the report.
- Money from selling on ebay or local consignment store: I will enter that income also as Income-misc.
- Gift cards:
- If I receive the gift card as gift, I will enter that as Income-misc, and then enter the expense paid by the gift card later as other out-of-pocket expenses.
- If I purchase the gift card myself, I enter the purchase as expense right away, so that the purchase will be accounted for regardless if I remember to use it or not. But when I use the gift card to pay for future purchases, I will not enter it in the report (if I remember …).
What to do with your expense report
It is totally up to you.
For us, we simply want to review the report monthly and clearly see if we are happy with the way we use our income. To be fair, we only have Jan 2020 report so far, so it may be little too early to tell what we will do next.