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Tip and Tricks to Ensure You Track Your Money? Print
Thursday, 3rd May 2007 (by J.D.)This article is about Basics, Money Hacks
One of my friends has decided to take a closer look at his personal finances. He and his wife make good money, but they live paycheck-to-paycheck. They spend whatever they have. It’s only since starting to track his expenses in Quicken that he’s discovered, for example, that each month he’s spending over a thousand dollars on groceries. This realization has prompted him to create a budget. Now he has some financial goals, and is trying to track the money he spends.
But tracking expenses can be tricky. The work is easy — it’s the motivation that’s difficult. I’ve been using Quicken for almost a decade, and the routine is drilled into my brain, but still sometimes I discover that I’ve forgotten to track my spending. (I especially have problems with cash — I forget to ask for receipts.) Last summer, an AskMetafilter user sought help on this subject:
Do you have any tricks to ensure that you track your money? I would like to track what I spend and what I spend it on. I have MS Money 2006, but I hardly ever use it…I find it hardly ever categorizes everything correctly. This is really more of motivation thing then a “how to” or “what’s the best system” question.
I’ve thought about just using checks, but that would be giving up the convenience of my debit/cards (plus the tiny percentage money back I get for using them). I use my cards for everything. I save all my receipts in my wallet and empty them into a manila envelope when my wallet starts to feel too big, which could take a few weeks. I would like to go thru my receipts and itemize everything; the problem is getting around to doing that.
I believe that this fellow is sabotaging himself by turning this into a HUGE task. If I go two or three weeks without reconciling my accounts, they’re a mess. When I process transactions more often, it’s easier to discover problems before they’re out of hand. Did I forget about that eBay purchase I made with PayPal? Or those two television shows I subscribed to at iTunes? Because I track my transactions often, I’m able to catch these things before they hurt me.
AskMetafilter users offered suggestions, but I think the original poster was left unsatisfied. Among the tips were these:
- Create a system. Make it painless. Come up with techniques that are easy and mindless, and then make them automatic. Develop a routine. Have a place for your receipts and your bills. Follow your system.
- Make the most of on-line banking. Check your account often, and set up as many automated transactions as possible.
- Do your finances regularly. The longer you wait, the more transactions there are to process. The more transactions there are to process, the more intimidating it all seems. Don’t procrastinate. Designate a time to do your finances and do them.
- Develop self-discipline. Ultimately, this is a problem that only you can solve. You must force yourself to track your spending if it’s something that’s important to you.
- Create custom categories. Don’t be hamstrung by the default categories in Microsoft Money. (Or Quicken.) Create categories that make sense for you and your situation.
- Work with a partner. If you’re in a relationship, ask your partner to help prompt you to track your spending.
- Post a visible reminder. Frykitty suggests putting up a graph of your progress. I think that any visual cue should help: a sign, a photo, etc.
In my response to the question, I noted that the best trick to tracking your finances is just to do it. Just start. Find a method that works for you, and use it. I spend maybe 10-15 minutes each weekend on my finances, and another 10-15 minutes to reconcile my statements once each month. The key to making this system work for me is routine: I always tuck receipts into the same spot in my wallet, I always put bills in the same drawer of my desk, and I always run through a mental checklist when I do my weekly finances.
The most important thing is to do what works for you. There are optimal solutions, and there are good solutions, but the best solution is the one that you actually make a habit.
[AskMetafilter: Do yo have any tricks to ensure that you track your money?]
May 3rd, 2007 at 2:41 pm
One of the best low key ways I found to track money is using the Motley Fool’s Spend Less Kit (http://g.fool.com/art/features/download/spend_less_kit.pdf?source=istmpolnk700157&vstest=search_042607_linkdefault). It’s basically a small envelope to put around your credit/debit card and allows you to write down each expense as you use it. A very simple tactic that is “in your face” and requires a writing implement and almost no discipline.
May 3rd, 2007 at 3:12 pm
Don’t pay cash for stuff. For all daily expenses, use only a credit card that will automatically download into MS Money or Quicken. That takes care of 90% of the grunt work right off the bat. Run Money/Quicken every day or two and click the “Update now” thing, and Bob’s your uncle.
May 3rd, 2007 at 3:38 pm
Two changes have completely transformed how I track my expenses (the most notable transformation being that, um, I actually *do* now):
1. Use a debit or credit card for EVERYTHING. That way there’s a built-in record in the form of online banking. I use cash only for “going out” (to eat or drink) so if I see an ATM withdrawal in my account I know how to categorize it. (Of course, pay down any credit card use immediately.)
2. Use Wesabe to easily categorize expenses. Wesabe’s a new web app that will automatically import your bank data, then let you “tag” each expense so, for example, groceries always get categorized as such. This significantly lowers the overhead of having to keep up on your expense tracking.
May 3rd, 2007 at 3:58 pm
It took a little while to get into the habit, but I eventually trained myself to make simple notes on any receiptless transaction so that I could enter it into my tracking program at the end of the day. It’s a pretty basic shorthand : -/+, , (for example “Cash”, (Lunch), ($5.00), (Cafe Barrone). For transactions that have a receipt, I simply use that to get the same information. I went through a period of time where I would be very good about keeping notes on my spending and other stretches where I slacked off (particularly when traveling). Right now I’m back on track and it definitely helps to see how my money is being spent. I’m still struggling with reducing spending in certain areas but I know now what my weak spots are.
May 3rd, 2007 at 4:07 pm
Google docs and spreadsheets works for me and my wife. Everything gets tracked, catagorised, tallied and transported into the monthly budget spreadsheet.
Best thing - I can do it from any computer on the net.
May 3rd, 2007 at 4:10 pm
I hate to disagree (NOT). But CASH, CASH, CASH! When using a debt/credit card it is too easy to lose track on a daily basis. I don’t really care where each cent goes. I get a set amount each week (in cash) and that covers food, entertainment, etc. When it is gone, that is it. Last weeek I splurged on food (Mmm, seafood casserole
) and I realized I had promised a friend to go to lunch (not usual in my world). The spending stopped because I had $20 left. I still do my budget on a legal pad not some sophisticated spreadsheet and have a reasonable mortgage and NO other debt.
May 3rd, 2007 at 4:15 pm
Run Money/Quicken every day or two and click the “Update now” thing, and Bob’s your uncle.
As long as you trust the information you get from the bank.
I prefer the discipline of entering receipts by hand, then reconciling against a statement at month-end. Two reasons:
a) it forces some reconsideration of of purchases as you account for them. “What the hell did I buy that for?”
b) it means that any fraudulent transactions get caught during reconciliation.
May 3rd, 2007 at 4:19 pm
But CASH, CASH, CASH! When using a debt/credit card it is too easy to lose track on a daily basis.
I go the other way. Debit/credit card transactions get entered in MS Money so they get tracked and categorized. Cash gets frittered away with no tracking beyond a “Cash Withdrawal” debit — I don’t have the patience to track every penny in a cash account.
So, for me, spending on plastic actually gives me better accountability.
(Oh, and a few percent cashback on the credit card. Not much, but given the choice between cash, debit, or credit I’ll choose credit. I always pay off the full balance, though.)
May 3rd, 2007 at 4:32 pm
Set a time, like Sunday evenings, to download your transactions and put them into your favorite app. Put it in your Google Calendar so you remember. For personal finance apps, I’m big on iBank from Igg Software, since I use a Mac.
I’ve lately been putting everything on a cash back credit card. It has been successful so far, but I don’t like the time lag it creates with my expenses–even if I pay it off every week (which is what I try to do).
May 3rd, 2007 at 5:00 pm
“Cash gets frittered away with no tracking beyond a “Cash Withdrawal” debit — I don’t have the patience to track every penny in a cash account.”
Me too. I track my cash in the sense that I take out the same amount every two weeks, and I can look in my wallet to see how much is left, but I don’t write down every three or five dollar purchase. I just don’t see the benefit.
Conversely, I’m meticulous about recording credit card purchases so I know how much I’ve spent on that bill. I hate having to take money out of savings, so I tend to put off major purchases till after my next statement date to keep my spending relatively consistent. I find it a lot easier to track spending and adjust as I go than to try to forecast spending and prescribe a budget ahead of time.
May 3rd, 2007 at 5:23 pm
The best way for this person to get started on this, is to hire someone to do it for him. If he has a child old enough for this, perfect. The point is that he will have a chance to see what his money is doing. Once this happens, he will find the time to do it is own. In his quest to save more money, he will fire the help and do it himself.
May 3rd, 2007 at 7:02 pm
I have been a penny watcher in Quicken since 96. I have categorized everything. I know what I am spending, earning, investing, etc. I’m just not good at the budgeting part.
For my wife and I, I created a simple spreadsheet to track money spent in the broad categories of Entertainment and Household. We are starting to decrease these expenditures quite nicely now. Wish we would have started this when we were dual incomin’ it.
I’m looking forward to MyMint.com, just to see what it is all about, as I am currently looking for a cheaper way to go than Quicken.
May 3rd, 2007 at 7:04 pm
I have to agree with the debit card people. It’s so much easier to track what you’re spending when it’s available to you online not longer after you purchase it.
May 3rd, 2007 at 7:45 pm
As my husband Will has already said, we use Google spreadsheets to track all our spending. I tried Microsoft Money, but I found that there were too many categories. Also, although it automatically pulled spending information from my bank account, it would often miscategorize it. I found it more time-consuming to go through and ‘fix’ the mistakes than to just record my expenses manually.
The biggest advice I’d give someone starting out with it is to enter your information more often (daily or at least a couple times a week) as it’s a bigger chore if you put it off. Also, if you do it more frequently, you have an easier time remembering ‘missed’ expenses (such as when you pay cash). I enter in receipts at least a few times a week, and check it against our bank statement weekly.
I’d also suggest trying to simplify your expense categories, at least at first. The first month we tracked expenses, I split everything into ‘fixed’ and ‘variable’ expenses, because I wanted to know what the total amount of our inflexible expenses was. Now I have it divided into ‘luxuries’ and ‘necessities’ to force us to put value judgements on our expenses and keep things in perspective. Within those two broad categories, I’ve divided into the categories we most need to keep an eye on: eating out, for example, is its own category, as is groceries. Keep it simple: don’t worry about setting up ‘perfect’ categories - just refine as you go along. Before you begin, you’ll probably have an unrealistic view of where your money goes and what areas need attention. If you start with fewer categories and add more as needed, you’ll find it easier to avoid feeling overwhelmed.
I’ve set up our spreadsheet to tally up the expenses as we go, and I put the sum at the top so I can easily scan and check our progress. It also calculates the percentage of our monthly income that is spent on each category. Later, I added a ‘budget’ sheet that compares our actual spending to our budget, so we can adjust our budget or spending as needed. We will be reviewing this summary sheet monthly to make sure we’re on track and change course as needed.
One other thing we did that I would recommend: create a spreadsheet that tracks your progress towards your financial goals. We’ve got a debt tracker that itemizes all of our outstanding debts, interest rates, balances and remaining credit. It also shows the difference between the amounts we owe this month vs. last month, and includes the starting information from when we first began tracking debts. I find it really motivating to see incremental progress each month, and to see how much we’ve reduced our credit card balances since we began this process.
Finally, another helpful motivator is knowing that the expense tracking does serve a purpose. Knowing where our money goes makes it much easier to set goals to allocate it in a way that aligns with our goals. It also encourages us to stick with other tactics to reduce expenses, such as making our lunches daily - just knowing I’ll have to enter that expense makes me more likely to take a few minutes to make a sandwich, or if I have to buy a lunch, to pay more attention to the prices on the menu.
May 3rd, 2007 at 8:51 pm
For one year, I tracked all my expenses to the penny - including my cash. I would keep all my receipts, and then enter them religiously.
After doing that for a year, I basically determined that I spent just about all my cash on food (eating out, etc…). So now when I take out cash, I just assume the whole thing goes to dining out. And when the cash runs out, so does the dining.
May 4th, 2007 at 2:03 am
I write my spendings into simple text file every day, because I think it is most simple to make daily habits than weekly or “sometimes” habit. And I have a reminder in PDA. PDA is always with me, so I can write in anytime I have free minute.
My problem now is how to divide spendings. I plan to make excel sheet with different categories, but I didnot yet. Still I am happy because I have all my spendings written in PDA.
May 4th, 2007 at 3:26 am
Weekly Roundup - 05/04/07…
FMF has a list of six steps to avoid foreclosure. I have just one: pay your mortgage on time and in full.
Flexo has a list of things that your body shop won’t tell you.
Jim talks about adjustable rate mortgages.
On the flipside, MBH talks about f…
May 4th, 2007 at 4:39 am
I’m with the frittering away cash group. Everytime I use my debit/credit card (including cash withdrawals) I note the transaction amount (rounded up the nearest £1) and purpose or item in my budget spreadsheet. Then I can see how much is left.
There is no substitute for just getting on and doing it.
May 4th, 2007 at 5:13 am
As noted elsewhere, use Quicken/MSMoney and download daily from the bank. This will cover checks, credit cards and ATM withdrawals. Save the receipts and enter those into Quicken, so that you get transaction matching with the downloads, at least with things that the banks know about. The paper credit card receipts are more of a “trust by verify” thing with the bank’s download and/or the merchant correctly entering the amount. I shred the receipts after I see that they’ve been downloaded into Quicken.
For cash, which I think is the hard part, I used PocketQuicken until my Palm died. That gives you a nice way to enter cash transactions in a way that can be imported easily into Quicken. You can enter credit card transactions into PQ, also, but paper receipts are sufficient, and you’re going to download all that from the bank, anyway. There should be similar products for MSMoney.
Right now, I’m using my company-provided BlackBerry to e-mail myself whenever I do a cash transaction, with payee and amount (and some category note, if there’s an ambiguity). I then manually enter this into Quicken. Not as nice as PQ, but I don’t feel like spending $100 on a new Palm, just for the cash tracking.
The main trick is to develop a habit of doing this. The cash part is annoying, but tracking cash fixes the biggest black hole you have.
May 4th, 2007 at 6:13 am
I use a spreadsheet on my Treo smartphone to track expenses as they come. The spreadsheet is synchronized to my PC once a week. After that it is basically Excel work to tally up all expenses.
Very simple and very effective.
May 4th, 2007 at 7:11 am
I use my debit card for everything and I always ask for a receipt, I keep my receipts in my pocket, and as soon as I get home I enter those transactions into quicken.
I email myself the amount I spend online during the day to my home address, by 6PM I know how much money I have left for the next day. It is very quick and easy.
May 4th, 2007 at 7:19 am
I am also in the download your transactions to Money group. I have had my share of problems with Money, but this is by far the best way that I have come up with. It only takes a minute or two each day to verify transactions and categorize them. Cash is tracked with a 40$ Cash Withdrawal each week or two. If I notice that I am drawing too much cash, I will make an effort to track exactly were it is going.
One of the problems with this method is that statistically people spend more money when using plastic then when using cash, but if you already have a handle on your spending I recommend this solution.
May 4th, 2007 at 7:27 am
I’ve just recently started tracking my family’s money, in an attempt to get out of debt, and stop the paycheck to paycheck pattern.
I try to track my finances on a daily basis - it takes about two minutes a day, either before going to sleep or next morning. This way money tracking is a habit that’s very easy to acquire - it takes very little effort.
I’ve also set an average daily(!) budget for me and my spouse, based on a rough estimate of our cash flow (based on past bank statements).
A good money tracking software can help too (I use GnuCash myself), but I guess a pencil and paper system can work too.
My short term goal is to analyze our expenses and plan a more accurate budget, and estimate the time until we get out of debt and start saving.
May 4th, 2007 at 9:48 am
Thanks for the great post, as always.
I’ve used Microsoft Money in the past but hated the messy files it generated in my computer. Yodlee is a lot better in my opinion, it does a good job on categorizing the transactions, and I can access it from anywhere.
I set up monthly reminders on Google Calendar so I remember to track my finance at the beginning of each month. Since I make 90% of my purchases with my credit cards, I can easily track transactions with Yodlee. Then I plug the balances on each of my accounts into a spreadsheet, where I track my net worth and performance.
May 4th, 2007 at 11:10 am
One of the problems with this method is that statistically people spend more money when using plastic then when using cash
I’ve seen this mentioned before. I’d be wary of using this as a justification for your own individual behavior.
All the statistics tell you is what the aggregate does: on average, people tend to spend more on plastic than with cash.
This doesn’t automatically mean that any given individual will spend more using plastic. Some may spend a great deal less; some a great deal more; some about the same; all we know is the average of a large population of individuals.
The statistics tell you a little information about a lot of people. And that’s interesting. But for yourself as an individual, your self-knowledge gives you a lot more information.
As it so often is here on GRS, the best answer is “whatever works for you”.
May 4th, 2007 at 11:38 am
After a number of attempts wifey and I settled on a hybrid debit-card and cash system. We use the debit-card solely for fix monthly expenses; mort, loans, and so on. For everything else we use cash with an envelope system; it is actually a binder with folders. Some folders do things like accumulate money from month to month for things like car registration or pool chemicals. Some folders are for discretionary expenses like eating out and entertainment. Overall our main goal of this system was to control spending from month to month but it also gives us a sense of what expenses we spend money.
May 4th, 2007 at 3:38 pm
I have a custom-built web utility that I use to enter receipts into, backed by a database (which I back up somewhat regularly); each entry has an account, date, description, value, and optional note (plus the auto-generated index). Having a database lets me generate all sorts of interesting statistics; I used to use a spreadsheet, but found it awkward. When we get debit or credit card statements, we reconcile them with receipts entered and add anything that didn’t have a receipt or got missed. The system doesn’t have fixed categories yet (e.g. “groceries” “house” “entertainment”); I may add that soon. We’ve been using it for about four years now (and it has about 2000 entries).
May 6th, 2007 at 1:14 pm
Cash, Cash, Cash! Again, who cares where every cent goes? I have no desire to know if I spent $2.00 on a hamburger or a muffin. I take cash for the week and spend on whatever I want. I really don’t care and don’t track every cent just so I don’t go over the week’s allotment. The proof is that I only have a small mortage ($520) a month and NO other debt. I have also made an agreement with my employer to only work when they need me (they have agreed to a minimum of 27 hours a week which covers the bills). I’m still employed (others are not) and have never had to travel for months on end (others have had 6 months on the road). don’t get bogged down on the small stuff.
Live on less than you make and keep it simple. BTW, I don’t deprive myself on the weekly cash budget. I love to cook and a good bottle of wine is a must.
I still do the budget on a note pad and budget and bill paying takes 30 minutes a month.
May 7th, 2007 at 9:40 am
It was really refreshing to hear that others also prefer the “paper” trail of a credit card over cash.
For so long, I kept reading advice that said use CASH only (in envelopes), but for me, cash just disappears. Yes, I can quit spending that month when the green stuff runs out, but at the end of the month I still wouldn’t know what I had spent it on. (Or if I had spent it at all…I used to find lots of cash left in pockets or bags.)
Ever since I figured out how to pay the credit card balance each month, I’ve been charging almost everything. Now I have a detailed record of where our money is going (and 1% cashback on it all!)
I download into Quicken frequently, which keeps me up to date on how much more I can spend that month without running over my budget. I have no complaints about Quicken. I had to adjust the categories at first until I got a set that works for me; that just take a little trial and error. Once I adjusted the categories and used them a few times, Quicken seemed to do a good job of remembering which stores go with which categories, so it is almost completely automatic now.
The information on our spending patterns was invaluable in helping us figure out where to adjust in order to make the budget work.
May 8th, 2007 at 1:50 pm
I usually use my debit card to pay for things, keep ALL receipts, and input them into my personal finance application of choice, http://www.trackyourbudget.com, when I get home. When I’m done with the receipts, I tuck them away into an envelope (ie: May 2007) and have them in case I ever need it.
Once you get into the habit, it takes 2 minutes to enter transactions and be done with it.
The key is to always get a receipt, and enter it when you get home.
January 24th, 2008 at 11:27 am
Money must be difficult to handle in America… I don’t get why you all have so many money problems. I use MS Money too (some old version), but since I’m in Austria and not in the States, the electronic download of statements does not work.
No problem for me! I get two monthly statements in my paper mail: one from my bank, and one from VISA. Each one lists all the transactions of my debit card or VISA card, respectively. At the beginning of every month, I type these statements into Money. Yes, manually — that takes 15 minutes at the most! While I enter the transactions, I also categorize them. That’s easy and fast.
I’ve done this for about two years now. That means there is plenty of data in there for statistics to work. The budget can be auto-created reliably from that data and only needs minor tweaks by me.
Recurring transactions like salary payments and utility bills (both of which are direct deposit/direct deduct) are recognized automatically. Based on those recurring transactions it is easy to get forecasts on future months’ cash flow.
The actual store receipts are of no interest to me. I keep those that make sense from a warranty perspective, but that’s it. And those that I keep, they just land in a box that I never ever look in, except if there is a warranty need.
– Am I getting the wrong impression from all these money blogs that just doing what I do is tremendously difficult in America?? Your comments would really interest me!
Thanks,
Torben from Austria
February 16th, 2008 at 2:12 pm
Flipping through so many pages of my monthly financial statements from Fidelity was tedious as I enter data to reconcile and track my investments (in an old but reliable software package). I got fed-up and wrote a bit of code. The purpose of this note is to rate the level of interest in the software that I’ve written.
The software is a Firefox plug-in, so if you don’t use Firefox, it won’t work.
The way it works is that you navigate Firefox to your Fidelity monthly statements page, push a button, and a new window opens with “just the facts”. You can do a “select all” and paste it right into Excel, or you can print it on a single sheet of paper (admittedly with a small, but readable font).
Here are some pictures that I took this morning:
http://i275.photobucket.com/albums/jj298/astarislaid/spms01.jpg
http://i275.photobucket.com/albums/jj298/astarislaid/spms02.jpg
http://i275.photobucket.com/albums/jj298/astarislaid/spms03.jpg
http://i275.photobucket.com/albums/jj298/astarislaid/spms04.jpg
http://i275.photobucket.com/albums/jj298/astarislaid/spms05.jpg
http://i275.photobucket.com/albums/jj298/astarislaid/spms06.jpg
Now that you have the idea of what it can do, here’s the “bad” news…. You would need to trust this code. I would make the source code available within the distribution, so if you were a programmer
(Java), you could check-up on me. It runs native Java on your machine, which could do about anything. All my code does is read the html from the Fidelity page and reformat it, but as with any program, it could do bad things. Or even if I am trustworthy, someone could copy this code and distribute a version that did bad things. So have
I talked you out of it yet?
I figured if enough folks thought this would be a really cool tool to have, and were aware enough to know what the risks were, I would publish it (including the source code). For me, it’s fun to write code, but a chore to figure out licensing, so I’m not going to go through that unless folks are really excited (maybe even excited enough to press a “donate” button!).
–Dale–