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Living Expenses: How to List, Track and Reduce

The more detailed your expense list is, the more aware you'll be of how you're spending and the better you'll be at making the necessary changes to manage your money.

Mastering your monthly expenses is a critical step to budgeting success.

By listing, tracking, and ultimately lowering your expenses, you can take control of your financial well-being.

In this guide, we’ll explore effective strategies to help you manage your monthly expenses.

1. Start with a Comprehensive Expense List

The first step in mastering your finances is to create a comprehensive list of all your monthly expenses.

Living expenses include the following:

  • cost of housing (mortgage/rent)
  • utilities (water, electric, gas)
  • subscriptions (cell service, streaming services)
  • insurance (auto, home, life, renters, pet)
  • dining and entertainment
  • groceries and household supplies
  • home and car maintenance
  • transportation (car payments, fuel cost, tolls, tickets, public trans)
  • healthcare (copays, OTC medicine, prescriptions)
  • and the expense of paying yourself first (which you must do)

This includes fixed expenses, such as rent, insurance, and debt payments, as well as variable expenses, like groceries, transportation, and entertainment.

The following is a sample table format in listing expenses.

DateCategoryDescriptionAmount ($)
2024-04-05Dining OutRestaurant50
2024-04-06EntertainmentMovie tickets25
2024-04-09TransportationPublic transit fare30

In this table:

  • Date: The date of the transaction.
  • Category: The expense category (e.g., Housing, Utilities, Groceries, Transportation, Dining Out, Entertainment, Shopping, etc.).
  • Description: A brief description of the expense (e.g., Rent, Electricity, Supermarket, Gas, Restaurant, etc.).
  • Amount ($): The amount spent for each expense.

2. Categorize Your Expenses

Once you’ve listed all your expenses, categorize them into distinct groups to better understand your spending patterns. Common expense categories include:

  • Essentials: Expenses for basic needs such as housing, food, utilities, and transportation.
  • Debt Payments: Monthly payments towards loans, credit cards, or other debts.
  • Discretionary Spending: Non-essential expenses like dining out, entertainment, shopping, and subscriptions.
  • Savings and Investments: Contributions towards savings accounts, retirement funds, or investment portfolios.

Here’s an example of a table categorizing expenses:

CategoryDescriptionMonthly Amount ($)
EssentialsHousing (rent or mortgage)$1,500
Utilities (electricity, water, gas)$200
Transportation (car payment, gas, public transit)$300
Debt PaymentsStudent Loan$200
Credit Card Payments$150
Personal Loan$100
Discretionary SpendingDining Out$250
Entertainment (movies, concerts)$100
Shopping (clothing, accessories)$150
Subscriptions (streaming services, magazines)$50
Savings and InvestmentsRetirement Account Contribution$300
Emergency Fund Savings$200
Investment Portfolio$100
Total Expenses:$3,800

In this example:

  • Expenses are categorized into four groups: Essentials, Debt Payments, Discretionary Spending, and Savings and Investments.
  • Each category includes specific expenses related to that category, along with the corresponding monthly amount.
  • The “Total Expenses” row provides the total monthly expenses across all categories, helping individuals understand their overall spending patterns and budget accordingly.

3. Track Your Expenses Consistently

Tracking your expenses regularly is essential for gaining insights into your spending habits and identifying areas for improvement.

Choose a method that works best for you, whether using a budgeting app, spreadsheet, or pen and paper. Record every expenditure, no matter how small, and categorize them accurately.

4. Utilize Budgeting Tools and Apps

Take advantage of budgeting tools and apps designed to simplify the process of tracking expenses and managing your finances. Many apps offer automatic expense categorization, spending insights, bill reminders, and goal setting to help you stay on track with your financial goals.

Find the best budgeting app for you on phroogal.com.

5. Analyze Your Spending Patterns

Once you’ve been tracking your expenses for a while, take the time to analyze your spending patterns. Identify areas where you’re overspending or where you can make adjustments to lower costs. Look for recurring expenses that no longer align with your priorities or values.

6. Set Realistic Budget Targets

Based on your analysis, set realistic budget targets for each expense category. Allocate a specific amount of money to essentials, debt payments, savings, and discretionary spending, ensuring that your income comfortably covers your expenses.

7. Implement Cost-Saving Strategies

Now that you have a clear understanding of your expenses, it’s time to implement cost-saving strategies to lower your monthly expenditures:

  • Negotiate Bills: Contact service providers to negotiate lower rates on utilities, insurance premiums, or subscription services.
  • Reduce Discretionary Spending: Cut back on non-essential expenses like dining out, entertainment, and impulse purchases.
  • Shop Smarter: Look for deals, discounts, and coupons when purchasing, and opt for generic brands or cost-effective alternatives.
  • Minimize Debt Payments: Explore options to refinance high-interest debt or consolidate loans to lower monthly payments.
  • Monitor Your Progress: Review your budget regularly and track your progress toward lowering expenses. Celebrate your achievements and adjust as needed to stay on track with your financial goals.

Maintain a commitment to financial health by practicing mindful spending habits and regularly reviewing your budget.

Listing Monthly Expenses Based on Needs, Wants, and Saving Goals

Listing expenses is important in the budgeting process. The more detailed your expense list is, the more aware of how you’re spending your money. And the better you’ll be at making the necessary changes to manage your money and improve your finances.

There are different ways to list monthly expenses. You can list expenses based on fixed and variable categories, use the “Bills, Debt, Optional” expense type, or use the below to categorize your spending.

The first two categories are your needs and wants.

What Are Your Needs?

Needs are necessary expenses that include housing, taxes, healthcare, and utilities.

 Do you have?ExpensesMonthly Cost
Housing: Mortgage or rent
 Homeowner’s or renter’s insurance
 Property tax (if not already included in the mortgage payment)
 Auto insurance
 Health insurance
 Out-of-pocket healthcare costs, copayments, prescriptions
 Utilities: electrical, gas, water
 Life insurance
 Groceries and household goods
 Transportation: car, gas, tolls, public, rideshare
 Debt payments: student loans, installment loans
 Credit card balances: minimum payments
 Other loans: monthly payments
 Child support or alimony payments
 Wellness programs: gym membership
 Care: childcare, adult care, daycare

Be mindful that you can overspend on needs, too. For example, you may need a car to get to and from work but overspend on a luxury vehicle that takes a bigger chunk of your income.

What Are Your Wants?

Wants are expenses associated with discretionary spending or fun money. They aren’t necessary to live a full life, but they can certainly add value.

 Do you have?ExpensesMonthly Cost
Entertainment: movies, events, concerts
 Dining out
 Prepaid meals and food delivery
 Subscriptions: news, streaming shows, music
 Travel: airline tickets, hotels, rental cars, etc.
 Cable and Home phone
 Additional perks: cellphone insurance

Knowing the difference between needs and wants will help you prioritize purchases that make financial sense. If you’re struggling financially or have other goals, meeting the need and postponing the want is the way to go.

What Are Your Goals?

You also want to think of your savings goals as expenses. This will help you spend for your future (aka save for future expenses).

 Rainy day fund (emergency savings strategy)
 Other savings account
 401(k) or another employer benefit plan
 Individual retirement account
 Other investments

The list you’ve read is an example. Take the time to list all your expenses completely. It will help you know where your money is going and what items can be eliminated to better manage your finances.

Jason Vitug

Jason Vitug is a bestselling author, entrepreneur, and founder of phroogal.com and thesmilelifestyle.com. His purpose to help others live their best lives through experiential and purposeful living. Jason is also a certified yoga teacher and breathwork specialist and has traveled to over 40 countries.

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