First Step to Budgeting: Tracking Your Expenses

In our last posts we shared about the freedom mindset and the importance of priorities. Tracking expenses was the next step we implemented along our journey and the first step in budgeting. The simple act of being able to see visually and concretely where your money is going will make achieving financial freedom possible.

There are two main types of expenses to keep track of- fixed and variable. 

Fixed expenses are expenditures that will stay the same (or mostly the same) each month such as rent, car payments, and other reoccurring bills like insurance.  Even though utilities (we pay electric, water, trash, and common area fees) can fluctuate from month to month, it goes under fixed expenses because usually it’s around the same range. 

Variable expenses are costs that will fluctuate from month to month such as groceries, eating out, entertainment, gasoline, and household items. 

Within variable expenses are the greatest opportunities to save money and be able to pay down debt.

We’ve said this before, but when you start writing down what you spend, you will realize just how much the little things add up. An example of what we’ve done- let’s say you get a cup of coffee every weekday on the way to work. If you spent $4 on just your cup of coffee, it adds up to $1,040 per year!  That doesn’t include breakfast food, lunch, and potentially dinner with drinks. What would your life look like with that much extra money this year?

The little things quickly add up!

The best way to start tracking your expenses is simply writing down what you spend. You can use paper, an excel spreadsheet, or phone app to record expenses- whatever works for you! We have used each of these methods at a different point in our journey and they all work great. We will provide details on the categories we sort our budget into in the next post. You can feel free to use it as a template and tweak it for your individual needs.

-Josh Klaas

If you would like to read more about our story, click here.

Posted by Josh Klaas


Great tips!! One thing I did, just to make it a little more bearable when I “sacrificed” that cup of expensive coffee or that donut shop bagel, was to – when I got the urge to stop and pick up my treat — take that $4.00 or $7.00, how ever much it was going to cost me for that treat, and I put it in a jar that I kept in my vehicle. I didn’t open it for a month. I called it my “spontaneous savings Jar”. My spontaneous savings added up to. . . $127.00!!!! That is 2 1/2 tanks of gas! That’s a dinner out with the kids!! (Which is so much more fun that drinking coffee and eating bagels in my car alone).

Thanks for sharing that Krista, that’s a great idea! Thanks for reading our blog!