And for those, my wife and I each just get a certain amount per month of discretionary spending. It is our own business what we do with it. I’m a big fan of people having their own money they can spend on the little things without having to be accountable to whoever is keeping the receipts.

Keep up the good work Gail, I appreciate your bluntness, and you make me laugh!

At the end of the year, I also include how much of my money goes to income taxes, Social Security, Medicare deductions, pension contribution- I don’t have to track these payroll deductions myself but only look at the year-to-date totals on my payroll statement.

I also have subcategories of groceries vs eat-out in my larger Food category. I may have to start a red wine subcategory I now know that I spend about $400 a month on all food, on average. This is for one person living in metropolitan DC area and I rarely eat at restaurants. I do buy lunch occassionally and buy fast food sometimes. I like to cook for other people and bring tasty treats for my office colleagues but I don’t know how much extra this is costing me.

I track various subcategories that I have the potential to spend a lot of money on like : Gifts for other people, travel, books, my sewing hobby, clothes. I starting tracking spending last year, learned a lot and refined my spreadsheets for this year. Besides my salary, I also include other income such as peer-to-peer lending interest, Ebay or Craigslist sales, rebates, credit card rewards, monetary gifts or the occasional windfall. I started doing this to estimate what I need to live on so I can plan for retirement. A lot of my money goes into savings already, but I really needed the whole picture of where my non-savings money was going.

I know where you are coming from and I agree in general. That is a really good comparison, budgets with diets. But I have found it helpful in both cases to initially – or at some point – do the math or keep close tabs, just to give me some good ideas of what to change or what to watch. Then I will stop keeping track but I will know to avoid this high calorie food, or to cut back on that kind of spending. Example, I took stock of what I was spending per month on Kindle books, was completely shocked, and now I go to the library or buy dirt cheap used paperbacks from Amazon. I probably cut that spending by 90% but I’m not keeping track of it anymore, I’m just aware of it.

I know what you mean. I can never remember how much I spent on clothes vs. groceries two weeks ago in Walmart. So whenever a trip to a big store includes lots of categories, I save that receipt and put it on my desk, so when I do get around to tracking my spending for the past.. month.. haha.. I can grab that receipt and parse out the booze from the bonnets.

In general, I like these categories, but I do use smaller categories to keep track of problem areas. For example, I have booze and cigarettes and fast food each in their own category. This has been very helpful in helping my husband and I curb or quit some bad habits that were costing a LOT of money when we really looked at it. This could be used on anything specific you want to track, like Starbucks or lottery tickets or gifts to ungrateful nieces and nephews who never say thank you.

We also track some specific one-time or once-a-year things for our own knowledge or future reference, such as costs associated with our wedding, costs associated with one vacation, with Christmas.

You’re better off focusing on just not spending much (and eating healthier) than on crunching numbers every day.

I don’t break out the $ for trips to Costco because I just don’t think it’s worth it. I mark almost all of it as “Household.”

I signed up for mint.com a while back, but didnt like it at all. For some reason, over the past month, I tried it out again, and it just works for us! I love it. I can see how much I have in the budget for groceries or gas money, and where I am at any time in the month. As the saying goes, Keep it Simple Stupid, and that’s what Mint.com helps me to do!

In July my husband and I evaluated our financial situation and felt our financial future was very secure. We both had good jobs, loss of those jobs was unlikely.

In late August MrP lost his job. In a flash, we were able to use the data generated by tracking our expenses to create a new budget. Since the data was historical, we knew how much & where we could realistically cut. We also knew we could afford for MrP to take time off to retrain for a more advanced career.

Sometimes this work is tedious, but it has saved the P family a great deal of suffering and uncertainty.

Great post!

To me, no spending is truly “unconscious”.

I was in debt as deep as anyone, and I never “tracked” a dime.

Rather, I invested all my time in “eliinating” spending.

It took some time but it worked like a charm for me…

DH and I are blessed with a generous cash flow, but when I started using Quickbooks to do our tax prep a few years ago, BOY what an eye-opener!

What I like about QB is you can set up your own categories, and tag them for Schedule C (US business expense tax form) as needed. So I can do an “Insurance” account that has sub-accounts for Auto, Renters, Life, ADD, and Professional Liability – the only Schedule C-tagged category.

The first year I discovered we had been in the habit of spending nearly $1200/mo on food. Groceries, incidentals, takeout, fine dining. This is two adults, in L.A. Shocking isn’t it? Now “dining out” is in the “entertainment” category, and you’d better believe we spend a lot less.

As some wise person once wrote, you can’t manage what you don’t measure. You have to see it to believe it.

I put all of this into a handy Excel spreadsheet that a friend and I created and it worked GREAT! For a couple of years we cut WAY back, tracked EVERY dime, and were able to pay off our vehicles and fully fund our emergency account. Hard work, but WORTH IT!

When I am working with clients, it does not matter what the financial issue or concerns are, i.e. “do I have enough to retire?” or “I am earning less than I did, how will I manage?” It always comes down to what and where are you currently spending your money.

A business coach recently asked me, “What is the most important question that must be answered before you go on a journey?” The answer is where are you starting from.

While it can be tedious to keep track of expenses. It is the only way to paint a true and current picture

I can usually cover my basic expenses,but have to use the profit I make from one income source to finance another, and it gets mighty tight at times. How do other people handle this?

We actually used Gail’s six month tracking before creating our budget, but it’s still needed some tweaking. We bought a house in there, and I was super-pregnant, so we underspent in some categories (clothing) and overspent in others (house stuff, dining out)

For us, having a budget is actually freeing. We tend to be thrifty, and having a budget allows to spend where needed without feeling guilty.

This is what I do:

1. Look at your receipt. You’ll notice that a typical big-box retailer doesn’t print out your receipt in order of the items scanned – instead, like at Target, they lump the purchases together, “like with like.” So, your clothing items are all under one category, your food is under another, etc. This is great.

2. You’ll see that your receipt has a break-down of taxes. It might say something like “8.0% on $X” – figure out which % corresponds with what’s on your receipt. If you know your area has a tax of 12.0% on alcohol, then the $25 you spent on beer will be charged at 12.0% (resulting in $3 in tax). So, on my budget sheet, I would record $28 in the “Entertainment” column (It’s in this category, and not groceries, as we usually only buy alcohol for special occasions. Also, I’m a LOT more entertaining after a glass of wine. ).

It takes a bit of time to do the math, but it’s just straight-up. I’d rather take 5 minutes to figure out *exactly* how much I spent on my recent trip to Target in each category than just lumping it all together under “Misc.” or whatever.

You need to strive for accuracy when recording your expenses and income. If you lump it all together, you’ll never figure out where you can cut corners and improve, and that defeats the purpose of this exercise.