Tracking your spending is one of those “well obviously you should do that” money things that seems like it goes without saying, right?
Ahem.
Well.
Other than my sometimes-tracked and sometimes-ignored Mint account, I’ve been pretty guilty of burying my head in the sand about where my money has be going over the past few years.
At my first job, it was easy enough to keep track of where my money was going, because there just wasn’t a whole lot of it. I was very lucky to have been raised with an almost-unhealthy aversion to debt, so racking up purchases on a credit card just wasn’t an option (to the detriment of my bank fees, but that’s another story.) Not paying attention to where my humble paycheques were going wouldn’t work if I wanted to be on track with rent, food, savings and my cell phone bill. And to be clear, I really wanted to keep eating food and having a cell phone.
Since then, and over the course of two different jobs at two different companies, I’m effectively making 50% more than I was when I graduated. That’s awesome, but as anyone in the personal finance world could have predicted, my lifestyle went up along with it. As that happened, I kept using my previously effective post-grad money management technique.
“Did I manage to pay off the balance of my credit cards this month, pay my rent and save my targeted amount? Yes? On track!”
Nailed it.
Except now, those credit card statements had ballooned right alongside my income, making way for entirely new categories of spending.
Dog treats and toys? Sure.
Kitchen gadgets and cookbooks? Yes please.
Even more books than usual? Go for it.
Ridiculous amounts spent on food? Well, as long as I’m still paying off my credit card and saving, it’s all good.
So instead of continuing to rely on a paid-off credit card at the end of the month as my key financial metric, I want to get into the details. I want to actually track my spending.
Challenge Accepted
For the month of September, I am going to track every receipt from every purchase manually in a Google Sheet.
How exactly is this going to work?
In case you, like me, are looking for a reset on examining your financial habits, this is how I’ll be tracking my spending this month. I’ll be using the same toolset that helps me manage basically everything else in my online life: Google. Specifically, Google Drive.
For the entire month of September, I’ll be putting every single purchase I make into a Google spreadsheet so that at the end of the month, I can get a really in-depth look at how much I spent, and where my money went.
I’ll be entering each purchase manually at the end of the day, which – unlike Mint or other budget trackers I’ve used – will keep my spending habits top of mind throughout the month. I don’t know if it’s just me, but when I use Mint I find it way too easy to ignore. I set it, and then check in at the end of the month, but it’s never influenced me when I’m actually spending money. Looking at Mint, I might be shocked at how much I spent at the end of the month in certain categories, but it never seems to impact my behaviour.
I’ll be keeping track of these specifics for every purchase:
- the date
- how much I spent
- where I spent it
- what category it’s in
When I say “category”, I’m thinking of things like trips to Costco, where a single receipt might cover several different categories, from “cleaning supplies” to “dog food”. Whenever that happens, I’ll be breaking it down by category and recording the different amounts spent on each.
I’ll also be tracking my savings as “spending” towards my different savings goals. This should give me the best look at how I’m actually doing on my goal of saving half my income – and identify areas that I can optimize if I’ve still got a ways to go.
As I go through the month, I expect the spreadsheet will grow to accommodate the odd intricacies that I know will show up, which is why I’m not posting a spreadsheet template here right now – I’m intentionally letting the document be flexible so it can grow as I track my spending, and turn into a useful template for me going forward. I’ll post the format that it morphs into at the end of the month, including my results. If you’re up for taking on the challenge this month too, let me know!
Get my Track Your Spending spreadsheet
This is the spreadsheet I’ve modified and improved over three years of tracking my spending—and I’ll send you a few emails to help you make it through your first month!
Have you found great budget templates that help you track your spending? Or, unlike me, has Mint actually helped you change your spending patterns?
Have you heard of YNAB? It’s the budgeting program that completely changed the way I use money! I While some might prefer the automation Mint does, I felt it didn’t really help me budget and plan spending, but just showed me what I spent money on after the fact. I didn’t think it help change my behavior.
For the most part YNAB is completely manual where you input your spending as you go. While some may think it’s cumbersome entering every single penny, it really isn’t. The phone app can track your location according to GPS so everything (category, story) but the amount is pre-populated. For the most part I enter the transaction really quick at the register. It takes me 10 seconds. Doing this every time really helps me create awareness on how much is in my budget at all times. For more complicated purchases like Costco I might do the categories when I get home. The app does split transactions for places like that.
I used to do a spreadsheet but it got hard to track because it wasn’t always so easy to enter transactions on a regular basis. You should check YNAB out! Even if you don’t use the app, just reading about YNAB’s four rules might help you budget! 🙂
I *have* heard really, really good things about YNAB! I think it’ll probably be next on my hit list of things to try, especially since I love the idea of being a month ahead of expenses. It’s also really great to know that you can split purchases into different categories, that’s huge for me. Thanks Vic!
I’ll join in on the YNAB bandwagon here… I love it. I’ve praised it on my blog quite a few times. I do have to put things in manually, but using the app when I’m making the payment at the store, it’s not really a big deal. And I have a category to keep track of my work expenses on there too, which helps me make sure that they all get reimbursed properly too (not that my work would skimp me, but mistakes happen).
I am so persnicketty about tracking my work expenses too! Again, not that anything would happen, but I remember saying to my boss once that I treat my paper receipts for work expenses like cash, since I’ll need them to be reimbursed for the money. (He looked at me like I was nuts, explained that I could print out my credit card statement and show the transactions there, and walked away, but whatever.) I always breathe a little sigh of relief when I get big expenses cleared on my card – and then a little jump for joy at the reward points, haha.
And to your original point, I am getting more and more convinced that YNAB is something I need to try!
Confession time: We have never done a down-to-the-penny tracker of our spending. We’ve tracked overall spending, and know what we tend to spend, and have based our retirement needs on the overall trends. But it seems like getting this granular will help you find hidden sources of spending and inspire you to find more ways to optimize your budget.
It sounds odd to say this, I know, but we actually plan to optimize our budget after we retire. Sure, we’ve cut out a ton of expenses and spending now, but there’s a big element of the unknown in our current situation because work travel throws such a wrench into things. We currently travel every week, so don’t actually know what our groceries will cost when we’re home more, how much we’ll save on gas once we’re not trekking back and forth to the airport, etc.
Can’t wait to hear what you learn from your month of tracking pennies! Good luck!
That’s exactly my goal – finding those hidden sources of spending that can easily fall through the cracks! I’m open to a range of outcomes with this, including deciding after the month that tracking at this level of detail isn’t really my jam.
I totally get the work travel thing too – while I’m not on the road every week, it definitely does impact a ton of budget line items when I *am* travelling! I also find it’s a major spending/tracking inconvenience, since I used to just look at my credit card balance to see how I was doing. When you’ve got a week in San Francisco or Las Vegas on there, even if it’s all going to be reimbursed, it’s definitely not as easy as just checking the balance! (The first time I went to Vegas for a conference, I ended up having to call my credit card company for an increase to my credit limit, haha. Again, all reimbursed, but whoa.) The months when I know I’ll be travelling might be months that I revert to this level of tracking if I don’t find another solution I like better, just for the ability to separate those categories out.
I dont track down to the penny anymore but I did for a few months. I also just used a spreadsheet on my google drive. I was honestly horrified at the amount of money I spent on stupid things… Eventually I decided to start giving myself an allowance instead of tracking everything as it was just to much work. I have a weird phobia of have no spending money left so I tend to hoard it and rarely spend all of it because I’m scared something will come up last minute lol. It seems to have stopped my overspending
That’s awesome – not the being scared part, haha, but the rest of it sounds like exactly what I’d like to get out of this challenge. A good idea of the places I’m not even noticing I’m overspending, and eventually get to a place where I get my “spending money” set for the month and can easily stay within it. I’m sure I’ll be exactly the same too, and be careful about that spending amount!
I don’t know anything about YNAB but I would *never, ever, ever* use Mint. The reason is that you have to disclose your account numbers *and passwords* to them and they are a 3rd party not connected to your bank. By doing this, you have given away the keys to all of your money. In addition, you would have waived all your rights to protection and insurance from your bank in the event of fraud.
Let’s say that someone, somehow, cracked mints database and got the logins and passwords. They could very quickly enter several transactions to take money from many people. If you lost money, your bank would quickly tell you that you breached the terms of service with them and gave away your passwords. Intuit (mint) would either say (sorry, too bad) or if they did try to cover they loss to you they would go broke.
All 5 Canadian banks have confirmed that any losses originating from the use of services like Mint will be the responsibility of the customer.
YNAB looks interesting and will allow you to use it without connecting your accounts but it looks like it would be quite time consuming to use without the bank connection. I’m afraid I have to put this tool in the same category as Mint.
I’m all for tools that help people track their money and spending but I can never agree to give away the keys to my accounts…
Honestly I’ve heard this brought up a lot about Mint – I do still have it linked but I’m actively looking for a good long-term solution other than my current tracking in Google spreadsheets, haha. I was thinking about YNAB, but they’ve recently switched to a monthly fee, and if my goal is to track spending over years – it is – that’ll add up really quickly. I don’t know if you guys get Moneysense, but they had a great article from a guy who did exactly that, tracked all of his spending over 12 years and analyzed it, and I know he recommended software he liked – I just can’t quite remember what right now. When I find it I’ll let you know! Until then, I may just take the time to cancel my Mint account – thanks for chiming in Jeff! (I definitely agree that voiding fraud protection is a *big* deal.)
We’ve used our current form of money tracking (a spreadsheet) since the start of 2008 and it has worked out fine. Your comment’s gave me the motivation to go back an compare the just completed spend for 2015 to 2008. I was really surprised by the result.
A couple of years ago we decided it was important to have both short and long term goals to ensure that we are rewarded for our achievements. In 2014 my new years resolution was nicknamed “project happiness” and we allowed ourselves some lifestyle creep. I was expecting to see that our actual spend had gone up a lot in 8 years.
The actual result was that our spending in 2015 was $800 per month more than 2008. When adjusting for inflation, the *real* increase in spending was ~$450/month. In my mind this is really much better than I thought it would be. Especially since we have one more child now than we did then.
I guess the point I am trying to make is that I don’t think a fancy tool is needed to gather the data. While I didn’t have anything that automatically gave me this information, just by having the data available I was able to get this information within a couple of minutes.
Opps, Wrong browser open. The comment above is mine not Marianne’s. 🙂
That’s awesome Jeff (reply based on your comment that this is from you, not Marianne!)
I love the idea of a “happiness” fund to make sure you’re being rewarded for your hard work, especially for two such dedicated savers! I know the travel fund will be especially rewarding for you as you escape winter for your family beach vacation this year – and it’s awesome to see that the real increase in spending was so reasonable! That’s what I love most about being more aware of my spending patterns. I can really analyze which purchases are adding more happiness to my life, and which were just spending for the sake of it without any real bump in how happy I was.
And honestly, knowing that you could manage all of this analysis from your spreadsheets has me pretty convinced that if I put a bit more work into consistent categories, I could use spreadsheets long term too! Thanks Jeff!
This is a great article to get someone started on the track to understanding where the heck their money vanishes. Thanks for sharing; I really enjoy reading your posts!
Thank you so much Cherine! And so much yes to that – it honestly changed my entire perspective on money because I couldn’t have told you where all of my money went beforehand, haha.
Of all the experiments I’ve tried to control our spending and reach goals, tracking and recording has proven the most useful. I actually think it is more important that budgeting. A budget is worthless if you don’t know if you are meeting it but knowing where you spend your money is still useful even if you do not have a budget.
For the first several years that I tried to do this I would stick with it for a few months and then I would consistently fail. I just couldn’t keep track of all the expenses and the overhead was so high. Either that or I would get demotivated or distracted and then would miss some expenses. The result was data that was worthless.
About 8 years ago we came up with a new system that is working really well for us. Basically we made a bucket budget — line items for each bill and known expense and then buckets for Food, Gas, Entertainment and Tangible goods. All spending goes in one of the 4 buckets. The first two are self explanatory. Tangibles are anything you buy that you can touch that isn’t food or gas. Entertainment is everything else.
All month, as we spend on credit or debit cards we just stuff the receipts in our wallets. At the end of the month we sort them into the 4 categories and enter them into the spreadsheet. The key is that it is a rolling budget — if we underspend in a category one month that surplus is available in future months. If we overspend we have to make it up in future months.
The one area I could never track was cash spending. All the $1 and $2 (or more) purchases that happen all the time. We solved that by deciding that *all* cash purchases are “entertainment”. Now, whenever we take money out of an ATM we just put the ATM slip in our wallet like a receipt. After that the cash does not require any tracking.
This system has done well to keep us on track and also motivates us to avoid all the small, untraceable, cash transactions. Since I know that any $ I take out are going to hit my entertainment budget, we are less likely to spend untraceable cash without thinking about it carefully.