Personal Finance

Money tip – Know your spending

I’ve worked with a lot of people over my 30-year career and regardless of age, sex, income, a marital status I have found there is one common trait of financially successful people: they live within their means.

The foundation of living within your means is to simply know how much you spend month to month. It is one of the key habits to take control of your money. There’s a spending epidemic going on out there because it’s now easier than ever to live beyond our means and spend more than we make. Spending and debt have really gotten out of control.

Do you have a spending problem?

How would you know if you are overspending or not if you never took any steps to track your spending in some way, shape or form?

Some people might assume this is where budgeting is a form of financial compromise. Not me. I don’t like the word ‘budgeting’ just like I don’t like the word ‘dieting’ because they both imply restriction of behavior. I’m not suggesting everyone needs to budget. Rather, I am suggesting that everyone needs to know how much money is spent each and every month. If you have a spending problem, then you need to budget your money. Just like if you have an eating problem, then you have to diet.

Successful people simply live within their means. How can you do that if you don’t know what your means are costing you? Take the time to figure out how much money you spend and then devote time to making this a regular habit. I promise you it will go a long way to securing your financial future.

Do you know your spending?

Most people don’t know how much money they spend on a monthly or yearly basis. The ones that think they know how much they spend the sort of know but typically underestimate.

Very few people know what they are spending and the ones that do, typically are in pretty good financial shape because they track and understand it. They are consciously aware.

Tracking expenses takes effort, conscious awareness, and ongoing work. Maybe that’s why most people don’t track expenses (or calories unless they want to lose weight). The trick is to keep it as simple and effortless as possible. The key is to turn it into a good life habit.

Ways to track your spending

There is no shortage of ways to understand and track your spending:

  1. You could write down everything you spend. Writing it down makes you more consciously aware of what you are spending and how much.
  2. You could use software.  Personally, I don’t use these programs because I have never found one that I can customize so I can’t really comment on their functionality.  If you have a great software program or app that you enjoy using, share it below in the comments for others to explore.
  3. You could use online tools. One of the most well known is which is now available in Canada. Tom Drake at MapleMoney is more familiar with Mint than I am so here’s a good interview with the Mint’s Aaron Patzer.
  4. Keep it simple.  For me, instead of using fancy online calculators, software or apps, I prefer a really simple approach to track spending.  I spend everything on one single credit card and pay it off every month.  You can read more about this strategy here – A simple way to track your spending
  5. Lastly, you can use a spreadsheet. This has always been my approach so I thought I would share the version that I use. You can download it below. The document also has other versions that some of my clients and colleagues have used.

Download Budgeting and Cashflow spreadsheets

My two cents

It matters less about which approach you use. They all work. The key is to use one and stick with it. Your goal over time is to keep track of your spending to the point where it becomes automatic or second nature. Develop this habit and it will be one of the most important financial habits for future financial success.


  1. B. Kwan

    You’re absolutely right, Jim. But one thing that I would add regarding spending is that some people feel ‘happy’ when they’ve purchased a new toy, piece of clothing, car, phone, or whatever. What they fail to realize is that so-called ‘happiness’ derived from acquisition of material goods is fleeting, and soon they need some other new thing to satisfy this need–the more you spend the happier you’ll be, and the more you’ll spend. It becomes a vicious cycle.

  2. Mary T.

    Jim, these are all great tips, but I agree that any of the methods will work, but the key is in doing them and having it become habit. Your comparison to dieting is spot on.

  3. Alfredo

    I’m 20 years-old and the Budgeting & Cashflow Spreadsheet is great for keeping track on where exactly I’m spending my money. It’s helping me stay on track, Thank you so much!

  4. Brett

    We are now retired and financially secure. But we still very much understand where our money goes, the value of that money, and how to maximize it’s value.

    Even today, we purchase staples, food and personal care, at Costco. So yes, I do have to buy a years supply of deodorant. But the upside is that this results is a saving of about 30 percent per package based on the normal sale price that I would buy one package at. When we look at this we say where else could we get a 25 plus percent after tax edge on an investment?

    Multiply this by what we spend on a year on these types of staples and the number becomes significant. Not to mention the savings on some non staples items.

  5. Don

    As Recently retired @62 and taking my CPP with my wife still working. I have the challenge of reducing expenses. Like the commercial says “You are richer than you think” Looking at where the money was going I have found at least $350.00 per month in expenses that can be eliminated. My life insurance can be cut back to 2 policies.One for me and 1 for my wife instead of 2 @ $100,000 for me.This Saves $80.00 per month and putting $8000 in my pocket with the cash value. For most people I say scrutinize everything. The next thing I will look at is why am I sitting on $25000 in value on my vehicle that could be cash and I could lease or finance for as low as $250.00 per mo. I will not pay the guy to shovel snow in winter saving $100.00 per mo. and getting some exercise.
    Scrutinize Your Cell phone bill.Renegotiate your cable/internet. You don’t get anything if you don’t ask.
    On and on

  6. Jodi

    Brett, My husband and I shop the same way and sometimes we save up to 90 percent. We scan flyers and expiry dates on all items and buy enough of the item to last us until the expiry date.

  7. Susan Thompson

    Thank you very much for the budgeting and cashflow spreadsheet! My job for the day!

  8. Ray in Toronto

    Working from home permanently as of March 2020 makes it easier to track spending.
    No more going out to lunches, or buying coffees or snacks, and saving money on transit, and this has made a huge difference and allowed us to save money for the first time (those things cost so much!). Our goal right now is to save enough for property taxes and not have an issue with paying everything else (mortgage).

    Now tracking pay dates, tracking bills (when they arrive and when they’re due), checking credit cards regularly (to ensure we don’t miss due dates), and limiting grocery shopping trips using lists.

    Keeping paid bills in individual folders (calendar year bill) in one small file holder. Unpaid bills are in their own folder (not filed) and using sticky notes for what bills are expected that month in the unpaid bills folder – not all monthly bills are the same, some months have added bills to the utilities like property taxes and/or water and sewage bills and home insurance is due (looked at all other bills over last year to determine when all of these bills arrive).

    Keeping track of the money coming in and going out is the best way to organize and plan if you need to save for something. Knowing when bills come in and when you need to pay them empowers you to be organized.

  9. Mark

    I have budgeted using Quicken since 1996. Learning how to properly budget allowed my wife and I to fully understand how much we had coming in each month and where we were spending our money. This allowed us to make sure we budgeted for investing and paying down debt. I recently retired at 58 and am teaching my kids the importance of budgeting and living within their means . I believe this is the single most important skill in building wealth. My advice: keep budgeting simple. Too many categories makes it tedious. 3 categories: Fixed costs, investing(saving) & discretionary spending. That’s it.

  10. Heather

    Great article. We have tracked our spending for well over 20 years and it is totally enlightening! It enabled us both to retire at 57.

  11. Judy Loutit

    Make a Summary of Bills/Payments with the due date, amount, ( paid manually or pre-authorized and monthly, bi-monthly, annually), Source of Payment (which credit card, or bank account) and finally one paper copy of a bill to easily find contact nos, account number , etc. and note name of FILE this paper copy is in. This list may include FUND(s) which you regularly add to, to save up for major purchases. Also, make a Summary of Income with the same details. Necessary for your budget, or for someone to use if you are incapacitated and cannot do this for yourself.

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