How to figure out your monthly spending (the easy way)

Understanding your spending is the first step to optimizing it.

written by oz chen

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You’d be surprised how many people don’t know how much money they spend.

And that’s not entirely their fault. Tracking your monthly spend can be hard due to multiple reasons:

  • Spending varies more than income. People have more streams of spending than streams of income.
  • Hard to track spending across multiple sources (debit card, bank transfer, credit cards)
  • Emotional and impulse spending

Before I dive into ways to track your spend, here’s a necessary preamble on how to approach this task so you have less headaches and higher success.

First things first: don’t get it perfect, just get started

Ironically, people often avoid tracking their spending because of perfection. They think they need to account for every expense down to every penny. Here’s why that’s a bad idea: your expenses can vary so much each month that trying to get it perfect is impractical.

You just need a good baseline estimate to start with. Optimizations can come later.
(It’s crazy to worry about being a few dollars off. Be within striking distance of a couple hundred dollars.)

This is why I start new money coaching clients with my free Mindful Money Map, a quick snapshot of your money that can be completed in as little as 10 minutes, designed to capture the main themes of your finances, rather than requiring you to count pennies.

Method #1: How to track monthly spending on 1 primary account

I recently got the Chase Ink Business Cash Card and switched ALL my payments exclusively to this card to help meet the minimum spend ($6000 in 3 months) to get the sign up bonus.

That means my spending for the next 3 months is relatively easy to track: it’s all done on one card. I can just look at my monthly statement, then add in items like rent that require me to pay through my checking account.

As someone who works in fintech, I can tell you that most banks are trying to improve their user experience and add helpful features, like a monthly spending breakdown. When I tell my clients about this, most just don’t know they already have access to this feature in their bank accounts.

Examples of banks providing monthly spending breakdowns:

Okay that’s all well and good, but what if you have MULTIPLE accounts?

Method #2: How to track spending across multiple accounts

If you love credit card rewards like me, then you probably have your spending across multiple credit cards. Good for points. Bad for tracking spending.

You could go into each one of your bank & credit card accounts, download separate reports, then compile it together to get an overall picture of your spending.

Or you could use a service like Rocket Money that links all your accounts and gives you a beautiful summary.

These services aren’t perfect and require adjustments. You might have to go in and fix some categories. Example: Rocket Money didn’t recognize that I had a $10,000 transfer to buy Treasury Bonds and accidentally categorized that as an “expense” one month. But it mostly gets it right, and is really helpful at flagging subscriptions.

My current system

  • I use a variety of credit cards to collect different points. I run most of my spending through a no-annual fee cash back card like the Chase Ink Business Cash. When there’s a big sign up bonus I’m trying to spend on, I switch all spending to that card.
  • My rent and gas utility are the only 2 expenses that directly debit from my checking account
  • All my income first comes into a checking account. I pay all my bills and do my savings/investment transfers from this account.
  • I use Rocket Money to track spending, and Empower to track investments. I find that each platform is better at one thing than the other.

Note on tools: I’m not sponsored by Rocket Money, but it’s probably the best tool that offers (good) spend tracking for free. If you’re looking for a replacement for Mint (sunsetting), you can also check out Credit Karma, Monarch and Copilot. The latter two are freemium and will charge you to use all features.

Method #3: How to get away with no tracking whatsoever

If your checking account balance is generally positive every month after spending, then you technically don’t have to budget. It all depends on your goals—e.g., how much you want to invest or how fast you want to reach FIRE.

I’ve worked with some clients to develop ha “reverse” budget, meaning they set aside a minimum to save/invest every month. Let’s say it’s 20% of their take home pay. Then, the rest of the 80% is completely up to their discretion.

This is easier to do if you’re high income and/or very frugal. Calling this out because it tends to be these very same high functioning people who worry too much about optimizing down to the last penny.

Remember, the long term game of budgeting is that eventually, you don’t have to budget.

So that’s a wrap! Establishing a baseline for your monthly spend is a simple action with surprising benefits:

  • Feel empowered to buy yourself freedom 1 month at a time.
  • Calculate your financial freedom number
  • Have a basis to compare against other people and if you’re “spending a lot” or little.

For FIRE chasers: Knowing your monthly spend is a pillar of financial independence. This is because your freedom number is dependent on spending. Spend $5K/month on average? That means $5K * 12 months = annual spending. Multiply that by 25 gets to get your financial freedom number.

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