Between your monthly bills, daily necessities, and the little things you buy along the way, it can be difficult to know where all your money goes. If more cash seems to be going out than coming in, a great way to take financial control is to set aside some time to calculate your expenses.

If you take the process step-by-step, it can be surprisingly easy to find out how you’re spending your money. Here's how:

Step 1: Gather your financial statements.

These documents, such as bills, mortgage statements, and account statements, can help you see exactly where your money is going. Looking for charges you make regularly can help you determine your largest expenses.

Step 2: Create a list of monthly expenses.

While this includes your recurring living expenses, such as your rent or mortgage, car payment, and utilities, it also includes the more variable amounts you spend on haircuts, groceries, and clothes each month.

Step 3: Examine your expenses.

To find patterns in your spending, try organizing your purchases in an expenses worksheet. No fee online tools, such as My Spending Report, can automatically track your spending to give an overview of your finances. You might want to distinguish between different types of expenses, potentially highlighting each in a different color. Consider separating your expenses into the following three categories:

Fixed expenses:

These are the necessary expenses that remain the same each month, including your rent, car payment, and insurance. You generally need to make big changes in your life to impact these expenses, such as trading in your flashy ride for something more economical or shopping around for a better insurance rate.

Variable expenses:

These are the necessary expenses that can vary each month, such as your utilities and weekly grocery bill. You can lower these expenses by changing your habits. For example, turning down the heater by a degree or two in the evening or using coupons for your purchases can help decrease these flexible costs.

Discretionary expenses:

These are personal expenses where you have more control over what and how much to spend. This category can include things like trips to the coffee shop, going to the movies, and dining out at restaurants with friends. If you eat out three times a week with your family or friends, you could potentially save hundreds of dollars each month by eating at home or by simply moving these gatherings to someone’s house. 


Gather your financial statements to use as a reference when tracking your spending.

Taking time to really think through these monthly expenses, and how to decrease them, is the first step towards managing your budget. Once you get your spending in check, you can begin to make big financial plans for the future – and feel confident about making them a reality

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