Why track money?
A budget is a plan; tracking shows what really happens. Many people are surprised by how much small purchases add up: a $5 drink each school day is about $1,000 a year.
What to record
For each transaction:
| Field | Example |
|---|---|
| Date | Oct 3 |
| Description | Groceries |
| Category | Food |
| Money in | — |
| Money out | $64.20 |
| Balance | $1,235.80 |
Keeping a running total
Update the running total after each transaction:
| Date | Description | In | Out | Balance |
|---|---|---|---|---|
| Oct 1 | Starting balance | $1,300.00 | ||
| Oct 3 | Groceries | $64.20 | $1,235.80 | |
| Oct 5 | Paycheque | $820.00 | $2,055.80 | |
| Oct 7 | Phone bill | $55.00 | $2,000.80 | |
| Oct 9 | Movie | $18.50 | $1,982.30 |
Tools for tracking
- A notebook or ledger
- A spreadsheet with formulas
- Banking apps that categorize spending automatically
- Keeping receipts and checking them against statements
Analyzing your spending
After a month, total each category.
| Category | Spent | % of total |
|---|---|---|
| Food | $480 | 32% |
| Transportation | $210 | 14% |
| Entertainment | $300 | 20% |
| Housing | $450 | 30% |
| Other | $60 | 4% |
| Total | $1,500 | 100% |
A circle graph makes this easy to see. Entertainment at 20% might be a place to save.
Comparing plan vs actual
| Category | Budget | Actual | Difference |
|---|---|---|---|
| Food | $400 | $480 | −$80 (over) |
| Transportation | $250 | $210 | +$40 (under) |
Spreadsheet formulas
- Balance: =previous balance + in − out
- Category total: =SUMIF(category column, "Food", out column)
- Percent: =category total / grand total
Reconciling
Compare your records with your bank statement each month. Differences reveal missed transactions, fees or errors.
Worked examples
Example 1: Balance $500; spend $45.80; deposit $200. New balance? $654.20.
Example 2: Coffee $4.75 every weekday for 4 weeks? 20 × 4.75 = $95.
Example 3: $360 of $1,200 spent on food. Percent? 30%.
Common mistakes
- Forgetting small cash purchases.
- Not updating the balance after every transaction.
- Ignoring bank fees and automatic payments.
Try it yourself
- Start with $250. Spend $32.40 and $18.60, earn $75. Balance?
- $15 a week on snacks. Yearly total?
- Budget $300 for entertainment; spent $345. Over or under, and by how much?
- Why compare your records to your bank statement?
Answers: 1) $274.00 2) $780 3) over by $45 4) To catch missed transactions, fees or errors.
Quick recap
- Tracking records every transaction and keeps a running total.
- Group spending by category to see patterns.
- Compare actual spending to the budget and reconcile with statements.