A free spreadsheet to track your expenses

(To download the file, see the “free budget spreadsheet and expense tracker” file in Financial Tools page)

Tracking your money is perhaps the most powerful step for saving money. But what is the best way to do it?

Programs like Microsoft Money and Intuit’s Quicken are great but I think they are too sophisticated for beginners. Online tools like Mint and Wesabe are great too, but they require you to give all your spending and investment information to a website…something some of us aren’t comfortable with just yet.

This leads to the easiest method which is to track your expenses yourself. You can probably get all the information you need from a basic spreadsheet that you can store on your computer.

In 2007, I created The Simple Expense Tracker as a template for people to get started. As you enter expenses, it automatically keeps track of all sorts of things like yearly savings and spending by category. And thanks to readers spreading the good word, the Simple Expense Tracker has reached thousands of people to date.

Recently I have uploaded a file for keeping track of expenses from the 2009 calendar year (for those of you updating, the file uses the same template as the 2008 version). The file can be downloaded in the Financial Tools section.

And if you’re new to the idea of tracking expenses, here are some common issues and questions…otherwise, enjoy!

I’m still not convinced. Why should I track my money?

See why you should know your spending. Also see why J.D. Rockefeller, the richest American, thought tracking expenses was among the most important things young people should do.

What does the spreadsheet look like?

Here’s a sample of what the spreadsheet looks like with some data I made up (click image for larger preview):

Can I use the tracker in Open Office, Google Spreadsheets, or Microsoft Excel?

Yes, people have tested the file in all of these (of course use common sense or email me if the numbers look off).

What features does the tracker have?

The tracker has been made simple, but it can still do many powerful things. You can customize categories, keep track of savings, and make a special tally of “planned savings” like investments or monthly transfers.

This tracking expenses sounds like a lot of work. How long does it take you?

I spend about two minutes a day. Naturally your experience might vary, so I suggest you give it a try. It will probably turn out to be easier than you expected.

(To download the file, see the expense tracker in Financial Tools page)