Medically reviewed in February 2022
Updated on April 8, 2022
Creating a monthly budget that tracks your income and expenses can have some serious benefits—and not just for your wallet. More and more research is linking financial worries to health concerns, unhealthy behaviors, and skipping out on medical treatments.
But the good news is that it really is possible to develop and follow a totally manageable, sustainable monthly budget.
5 reasons to track your spending
Before we get to the how, let’s discuss why you should be tracking your incoming and outgoing money:
It’ll help you identify spending patterns. Many of us spend mindlessly. Grabbing a $3.50 daily coffee from the café, for example, adds up to almost $1,300 after a year. Tracking every single expense allows you to learn more about your spending and saving habits—both good and bad—so you can assess and reset. Once you get a better look at your patterns, you'll learn how much cash you’re really dedicating to non-necessities.
It’ll help balance your spending. Many budgets include different categories for spending, such as food, clothes, and housing. If you spend too much in a particular category, such as restaurants or entertainment, your budget will tip you off. This can help you more evenly distribute your money and help prevent future overspending.
It’ll help you achieve your short- and long-term financial goals. Are you saving for a nice pair of sneakers? Or maybe your first house? By building savings goals into your budget, you may find it easier to pay for both everyday items and big-time investments. Make it so you don't even have to think about it: Set up automatic transfers into your savings account, so banking your money just feels like a regular monthly expense.
It’ll help you spot fraudulent charges. It seems like there’s a new credit card breach every day. Keeping a close eye on your daily expenditures can help you identify unauthorized charges from your credit cards, checking account, or savings account immediately—and help you avoid potential complications down the road, like identity theft.
It’ll make you healthier. Money troubles are a significant source of stress for many Americans. Uncontrolled, chronic stress can affect your health and wellness in countless ways, increasing your risk for depression, anxiety, gastrointestinal distress, high blood pressure, heart attack, and stroke, among other issues.
Maintaining a monthly budget won’t just keep your wallet happy. It’ll help keep your brain, heart, lungs, digestive tract, and emotions healthy, too.
How to start tracking your spending
Whether you want to track every single expense in a notebook, spreadsheet, or a mobile app, there are tons of ways to manage and monitor your finances. The important thing is to choose the right tracking method for your schedule and lifestyle. If budgeting becomes a hassle, you probably won’t do it.
Once you’ve chosen a method, identify the spending categories you’ll have each month—and don’t forget to include a budget for savings! If your finances are combined with your partner’s, be sure to discuss exactly how much is reasonable to spend in each category throughout the month, so there are no surprises from either of you. Then, start tracking—and saving.
