Now that you have made a budget and you are living below your means, you need to keep track of your spending in order to be sure you stay within your budget and don’t spend more than you earn.

I use Quicken to track my spending, entering my receipts and transactions on a daily basis. You don’t have to use Quicken, Microsoft Money is a common alternative, or you can do this with just paper or a spreadsheet as well. Once a week I create a report with Quicken and import that data into my Excel budget spreadsheet. I enter my spending for each category and review how much money I have left in that category for the month (or recognize that I have over spent somewhere). Doing this weekly prevents my spending from getting too far out of control and it provides flexibility to change my budget if the unexpected occurs or if my needs change during the month.

In my earlier post about budgeting, I uploaded a simple spreadsheet sample to help you get started. Now I have an updated, slightly more complicated version that includes fields for tracking your money each week. Take a look at the new version to quickly get up and running with a budget and weekly tracking (Excel, opens in new window).

The key to using this budget spreadsheet is to start the month by filling in the ‘Plan’ columns with your best estimates. Then each week (I update mine every Sunday afternoon), put in your actual numbers for each category for the week. The ‘Total’ and ‘Difference’ columns at the end of the row will help you to see where you stand and how well you prepared for the month.

Budget Tracking Spreadsheet Screenshot

In addition to using a tool to track your spending, have a regular ‘budget meeting’ with your spouse, your kids, or anyone who helps you to stay accountable. Make sure that you are scheduling a time to discuss where you are at with your spending, how the month is shaping up with your money and any areas of concern. Communication is critical, and frequent updates help you to stay on top of things. If you keep up with this you shouldn’t have any ’surprises’ or mistakes that lead to bank fees or bounced checks or anything else. This is not a time to place blame on anyone if mistakes have been made, but rather a time to discuss what went wrong and what went right in a comfortable way. You need to be a team!

Tracking every dollar spent and assigning it to a category may not work for everyone. It works for me because I’m the computer nerd in the house and I like to collect and analyze the data. If you aren’t wired this way, consider much more broad budget categories that you fund at the start of the month or with each paycheck. Maybe you put $100 in your pocket (or an envelope) for food and that covers your groceries and eating out for the week. You don’t have to track all of those dollars, but you do have to commit to the fact that this is food money and you aren’t going to mix in dollars from other categories and spend it on unrelated things.

You may think the budget process I covered is too tedious, but I would recommend trying to track every dollar for a month or two and see how it goes. At the very least, you’ll have a better understanding of where your money is going. If that’s not for you, just be honest with yourself about where you are assigning your money and don’t stray too far from your plans.

9 Steps to Get Out of Debt

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