The Power of Tracking Your Spending

Most people underestimate how much they spend in certain categories. They forget about how often they grab food on the run, fail to incorporate taxes or tips into their spending, or don’t count things purchased with cash.

By tracking every dollar you spend for at least one month, you get a clear, honest picture of your habits. This isn't about judgment — it's about awareness. It's almost certain that you will be surprised by something that comes out of it. And you can’t change what you don’t see.

How to Do It

1. Pick any reasonable method. You can use a notebook, spreadsheet, or an app like Mint or YNAB. Choose whatever feels most natural to you, as that will be the easiest to stick with.
2. Record everything. Every single purchase counts — coffee, parking meters, impulse buys, grocery runs. Don’t fall into the trap of thinking you shouldn’t track something because it is immaterial or out of the norm. Small things add up, and there will always be expenditures that are out of the norm. They are still something you need to consider.
3. Sort into categories. At the end of the month, add up totals for areas like groceries, dining out, transportation, subscriptions, etc. Here is where you can designate things as “unusual” and decide whether you need to worry about it recurring.
4. Keep going. Once you have a system for tracking, try to do it for a full six months, or even a year. This way, you catch those infrequent but still very material types of expenses that you need to budget for, like holiday gifts, car maintenance, or annual fees.

What You’ll Discover

Most people are surprised by at least one category of their spending. Small purchases add up quickly, and some spending happens so quietly we hardly notice it. This is especially true if there are others in your household contributing to the spending, as you may not be aware of everything they are spending money on until it is tracked.

Seeing the numbers laid out often creates “aha” moments. When you compare how much you are spending on each category to your priorities, you may realize you’re spending far more than you thought (or you should) on things that don’t really matter to you, while struggling to save for things that do.

By tracking your spending, you will see what your habits are and you can start making intentional choices about where to put your money. You don't necessarily need to change a lot of habits. In fact, sticking to a budget is easiest when you work with your own unique lifestyle, not against it. You will, however, see the impact of your habits and no doubt find ways to adjust in order to reach your goals. This is what a budget is – not a punishment, but a plan for where you will spend your money, based on your unique style, combined with your personal priorities.

Chances are, once you see the value of tracking your spending, you’ll keep some version of the habit going. Some people track their spending every month indefinitely. Others do a 30-day reset once or twice a year. Either way, keeping an eye on what you're actually spending is a powerful tool for financial awareness, and forms the basis for all financial management.

Charla Smith & Company is a Calgary-based Licensed Insolvency Trustee, serving the Alberta region. We regularly help individuals consider their options when they are dealing with overwhelming debt. When an individual files a bankruptcy or Consumer Proposal, we provide them with legally-required financial counselling, including tips on budgeting. If you'd like to explore options for your debt, or you need a referral to an organization that can help with more budgeting advice, please reach out to us.

Disclaimer: This publication provides general information and should be seen as broad guidance only. The information contained herein cannot be relied upon to cover specific situations and you should not act, or refrain from acting, upon this information without obtaining specific professional advice relating to your particular circumstances. Charla Smith & Company Ltd. does not accept or assume any liability or duty of care for any loss arising from any action taken or not taken by anyone in reliance on the information in this publication or for any decision based on it.