How do you keep track of your expenses?

keep track of expenses

Financial management has become an essential skill for success in life. Yet many of us struggle to master the crucial practice of keeping our accounts. Knowing how to do your accounts effectively can transform your relationship with money and help you achieve your financial goals. We’ll find out why it’s so important to do your accounts, look at the traditional and modern methods used, and guide you through a step-by-step guide to help you manage your finances like a pro.

In this article:

  • The importance of doing your accounts
  • Traditional accounting methods
  • Modern accounting methods
  • A step-by-step guide to doing your accounts
  • Additional tips

Why is it important to track your expenses

Doing your accounts isn’t something you do for fun. It’s a duty we impose on ourselves for one fundamental reason: to control our financial future.

Knowing exactly where every cent, every cents you earn goes gives you total control over your money.

Keeping track of your finances allows you to track your spending, set realistic budgets, avoid unnecessary debt and plan for long-term financial goals.

For example, by being rigorous with your accounts, it will be easier to manage the future purchase of your home, or to prepare your retirement based on your current salary.

Neglecting to manage your accounts can lead to unfortunate consequences… And everyone knows it!

Debts can pile up, unpaid bills can start piling up and hard-earned savings can evaporate… Poor account management can deprive you of the opportunity to invest for your future, affect your borrowing capacity and even cause financial and emotional stress.

Of all the disadvantages mentioned, it’s this last point that we insist on (because it’s the most important in the end): doing your accountsisn’t just about numbers, it’s about financial security, peace of mind and realizing your aspirations

 It’s about creating a healthy, balanced life.

To do that, you need to use the right tools! Let’s take a look at the best ways to keep track of your accounts.

Traditional accounting methods

Before the digital age, people did their accounts by manual methods, using… paper!

Doing your accounts on paper

And yes, the simplest and most common method was to use a notebook and pen. Managers of the time wrote down all their expenses and income, often categorizing them by type.

Although basic, this method has the advantage of simplicity. You don’t need any technological or accounting knowledge to keep an accurate record of your finances.

The simple way to do your accounts on paper: the kakebo!

A kakebo is a simple savings account book that allows you to classify every amount spent, regardless of price, into separate categories to help you better manage your finances.

Do the accounts in Excel

The advent of personal computers has introduced a new method of bookkeeping: the use of spreadsheets such as Excel. Spreadsheets offer greater flexibility for organizing and analyzing financial data.

You can set up formulas to automatically calculate your total expenses, income and savings.
 By using parameterized formulas, calculation errors are greatly reduced (see zero), and you get an overview of your finances at a glance.

On the negative side: even if managing an Excel file for your budget isn’t very complicated, creating and managing these spreadsheets can require technical skills that not everyone possesses. A little training could help if you’re not comfortable with this tool.

Alternatively, we’ve created a free budget manager for you! It’s available right here.

Although these traditional methods are still in use today, they may not be suitable for everyone.
 It all depends on your way of doing things and your school. You may (like me) find these ways of doing things laborious, since they don’t offer the convenience and efficiency of digital tools. The rest of this article should be of interest to you!

Modern accounting methods

If you use all the technological tools available, keeping your accounts in 2023 is much easier and more accessible than it was then.

Doing your accounts with an app

A multitude of money management applications are available on the market. They offer a variety of features to help you manage your accounts efficiently.

Apps like Linxo, Bankin’ and Lydia, to name but a few, can be invaluable allies in managing your finances.

Using these applications to do your accounts is pretty straightforward. Most of them share the same functionalities. In particular, they allow you to synchronize your bank accounts (which makes it easier to track your income and expenses in real time).

You can also set up budgets for different spending categories. Alert features are also useful: the app will alert you when you’re approaching your limits. Some apps even offer automatic savings features (such as setting up a recurring transfer) and sometimes personalized financial advice.

One of the main advantages of mobile applications is convenience.

With an app, you can do your accounts anywhere, anytime, with all your financial information at your fingertips.

Finally, with personal finance management apps, it’s impossible to make miscalculations: they provide clear visualizations of your finances, and can even help you identify problematic spending habits! For example, with the help of a personalized report, the app could warn you that your spending over the month in restaurants is higher than the average for previous months.

This is a major evolution in the way we manage our personal finances.

Check whether your main bank’s banking application offers this type of service. Even if most of our banks are lagging behind, some are trying to offer functionalities via their application or online software.

How to do your accounts: a step-by-step guide

Doing your accounts may seem complex, but by breaking the process down into simple steps, you’ll see that it’s not such a difficult task. Here’s a step-by-step guide to help you do your accounts efficiently.

Step 1: Identify your income

The first step in doing your accounts is to identify all your income. This includes not only your salary, but also any other source of income such as rent, passive income, dividends, etc.

Make sure you have an accurate overview of all your income to understand how much money you have at your disposal each month.

Step 2: Track your spending

Identifying is good, tracking is better. The second step is to track your spending. You need to record every purchase, invoice or payment you make.

To simplify the task, you can categorize your expenses (such as food, housing, transportation, leisure, etc.) to see where your money goes.

Step 3: Draw up a budget

Once you have a clear idea of your income and expenses, you can draw up a budget.

A budget is a plan that details how you intend to spend your income each month. It should take into account your incompressible and essential expenses (such as rent or bills) as well as your savings targets.

To do this, we recommend the timeless 50 30 20 rule! It’s a simple and effective way of dividing up your budget.

Step 4: Planning for savings and investment

After covering your essential expenses, you should allocate a portion of your income to savings and investment.

It’s the essential step in preparing yourself for the future, whether it’s a major purchase, a financial emergency, or your retirement.

If you’d like to find out more, we recommend that you read our articles on investment (click on “investment”) in the menu.

Read the article: 9 tips for retiring earlier

Step 5: Follow-up and regular adjustments

Accounting is not a one-off activity, it’s an ongoing process.

You need to review and adjust your budget regularly to take account of changes in your income and expenses. Yes, over the months and years, you’ll earn more or less money, have more or less expenses… You need to keep your budget in line with your accounts.

This will help you stay on track to achieve your long-term financial goals.

Additional tips for doing your accounts

Now that we’ve covered the step-by-step process of doing your accounts, here are a few final tips you might find useful.

The importance of consistent bookkeeping

We mentioned it a few lines ago, but it’s worth stressing: keeping track of your accounts is not something you do once and then forget. It’s a process that requires consistency.

Whether you choose to do your accounts daily, weekly or monthly, the important thing is to stick to it. Keeping your accounts on a regular basis will help you stay on top of your financial situation and avoid unpleasant surprises.

Learning to deal with the unexpected

Even with the best of budgets, the unexpected can happen. That’s why it’s important to include an emergency fund in your budget.

An emergency fund is simply a sum of money set aside to cover unexpected or urgent expenses. It gives you financial breathing space, so you can deal with the unexpected without stress.

The importance of financial education

Finally, it’s crucial to stress the importance of financial education. The more you know about money management, the better you’ll be able to balance your books and make intelligent financial decisions.

In fact, it’s an ongoing process: the best manager in the world is always learning. Never stop learning, never stop reading books on financial education, and never hesitate to ask experts for help or advice if necessary.

Keeping track of your finances is an essential skill to master if you want to achieve financial stability. Remember, it’s not just about keeping track of your expenses and income. It’s also about planning for the future, preparing for the unexpected and committing to your financial goals. By adopting a consistent, educated approach to money management, you can transform your relationship with your finances and create a healthy, balanced financial life. So, how did it go? Have we inspired you to do your accounts better?

FAQ

Which app to use for your accounts?

If you’re looking for French apps, Linxo, Bankin’, and the La Banque Postale app are good choices. These apps let you bring all your bank accounts together in one place, track your expenses and income, plan your budget and get tips on how to manage your money effectively.

How to do your accounts in Excel?

To do your accounts in Excel, start by creating a new table.

  1. In the first column, enter your sources of income (e.g. salary, rental income, etc.).
  2. In the second column, write down all your expenses (e.g. rent, bills, shopping, etc.). You can create different categories for different types of expenses.
  3. In another column, note the amount of each income and expense.
  4. You can then use Excel’s SUM function to calculate your total income and expenses.
  5. Finally, subtract your total expenses from your total income to get an overview of your financial balance.

Don’t forget to update your table regularly to maintain an accurate view of your financial situation.

Jordan Houi
Article by

Jordan Houi

Passionate about savings and investment topics. I modestly try to offer you simple, sometimes not so simple, solutions to beat inflation.

Discover our other articles on budget management: