Expense Tracking: Most of you have faced a situation where salary has been credited in your account but less than a day or two, your account gets empty. After that, you went to friends or family for help.
Have you ever thought about why this happens?
The reason behind this is because your expenses are more than your income.
That situation is faced with almost all of us. To overcome this situation, there is only one solution. Track your expenses from day one.
Expense tracking is the foremost part of creating a budget for the individual. Keeping a daily record of your expenses improves the financial health. Expense tracking can help you stay on top of your cash flow. It also leads you to financial freedom.
- Track Expense & Reduce
When you start tracking your expenses you get to know where your money is flowing. Recording your expenses can ensure that you are financially aware of your current situation. It can also improve your spending habits by knowing where your money is going. And how much you are spending. By expense tracking, you can reduce your unnecessary expenses that grant an adverse impact on your monthly budget.
- Start Savings & Increase
When you start tracking your expenses, you get to know about your savings. If you have zero in your savings, then this is the right time to start saving. Your small steps towards savings give you long term results. Once begin with small steps, then gradually increase and build your corpus.
- Convert Savings into Investing
When you are clear on your savings and expenses, then you can start investing your money. Keeping your money in a savings account gives you nothing. If you start investing, it will give a return much fold. Diversify your savings into different investment instruments. Like the stock market, SIP, Mutual Funds, Debt Funds, Gold, Real-estate, and other similar instruments.
The major motto for financial education is financial freedom. Expense tracking is a small step towards financial freedom.
To step forwards here, I am going to give you an expense tracking spreadsheet. By using that, you can start tracking your income, expenses, and savings.
BENEFITS OF EXPENSE TRACKING SPREADSHEET
- It will give you a clear picture of your income, expenses, and savings.
- Can be able to define targets.
- Build a habit to pay yourself first. That concept is given by Robert Kiyosaki.
- You get a bird’s eye view of your cash flow.
- Can predict your future cash flow and financial health.
- This expense tracking sheet can also use to prepare your monthly budget.
HOW TO USE EXPENSE TRACKING SPREADSHEET
The Expense Tracking Spreadsheet will look like as per the below picture.
The SUMMARY sheet gives you the overall picture of your financial health. This sheet is used as a final report sheet.
The ANNUAL CASHFLOW sheet gives you an overall picture of your annual cash flow, based on the inputs given. The positive cashflow is the healthy sign & the negative cash flow is the SOS trigger.
The INCOME AND EXPENSE sheet is the actual input sheet where you need to enter your financial data. This data is related to your income, savings, and expenses.
THE INCOME TABLE
Now, start with the income and expense Input datasheet.
The first table belongs to the income table where you need to enter the data like your salaries (Self, spouse), dividend income, reimbursements, rental income, and other incomes if you have.
If you do not have any other income other than your salary, just need to enter your salary data only.
This table clarifies your monthly as well as your annual income.
Please remember, the last row of the income table, i.e., transfer from savings for use, means whatever amount you transfer from your savings account is considered as an income. This amount has been adjusted in your savings balance under the summary sheet.
In the 2nd table, you need to enter your saving data. Where your income portion will distribute under the savings table. After income, you must enter the values in your savings. It will help you to show how much amount you have in your savings, in a month or year.
The rest of the table under the Income and expense sheet belongs to expenses. I have added the maximum possible category that is further sub-divided into single expense line items. Also, I have added some entry rows where you can rename them as per your inputs.
Once all the data has been entered in your INCOME & EXPENSE sheet, you will find your actual net income in SUMMARY Sheet. Also, you will find how much amount you have left that you can still use in your expenses. That data shows under spending balance.
The benefit of spending balance is that it will add up to your net income in the next month, which will increase your spending balance. It is your choice will you convert into saving & investment or keep there only.
If you search over the internet about expense tracking, you will find a lot of online applications for expense tracking. But the benefit of using the spreadsheet has its benefit. You will find the ground level report of your expenses and savings.
I am using this spreadsheet for quite some time, so I thought to share it with you all. Seriously, I have seen the benefits of using this spreadsheet, because I know where my money is flowing.
In this tuff situation of COVID-19, salary cuts give you a lot of pain, but a budgeted view helps you a lot.
If you have any queries regarding the use of the expense tracking spreadsheet, please comment in the comment box below.