My wife and I have been trying to keep track of our expenses and keep within a budget. But we often get mired down in recording receipts, checks, and especially keep track of cash used. We've been trying to record each day's expenditures but after a while we just get behind. Before long a few months have passed and we only have about 1/3 of the expenses recorded.

When doing a budget and keeping with it do you have to anally keep up with each dime spent? Or could we just refer to a bank/credit card statement that's about a month behind?
What's a technique you know to keep yourself on top of tracking expenses?
How do you stick with your budget?

Big question with lots of possible answers.

How much detail you track depends on why you're keeping a budget: some people start out tracking everything for a few months to see where their money goes, but then after that they just focus on the "trouble spots," or areas where they have a tendency to spend too freely. When I was budgeting in Quicken, I tracked only four categories in my budget although I still entered all my transactions (mainly to help me with my tax reports at the end of the year).

I think your first question to yourself should be: "why am I keeping a budget?"

Your next question should be: "how detailed does my budget have to be in order to accomplish the objective I answered with the first question?" If cash tends to fly out of your pocket and you can't remember what you spent it on, maybe you need to track your cash expenditures. But if your cash expenditures only account for 0.5% of your monthly spending, is it really a problem?

Many people don't bother budgeting or even tracking their income and spending: as long as more money is coming in than is going out, that's all that matters. Other people track their spending but don't have a budget. And others have a budget and track their expenses. There are lots of options.

If you're serious about budgeting, the best software I've found is You Need a Budget (YNAB), which allows you to download and import files from your bank so you don't have to enter all your transactions (it does not, however, connect directly to your bank the way Quicken does, but on the other the budget module in programs like Quicken and Mint is next to useless).

One of the best features of YNAB is that it's flexible: you should stop thinking of a budget as having firm, fixed amounts for each category, because life doesn't work that way. We budget x for food but we end up spending y. Life is full of surprises, and it's impossible for most people to stick precisely to the budget amounts they estimate for each category at the beginning of the month. So YNAB allows you to move your allocations around, but you have to work with the money you have -- it forces you to decide which category you will "rob" in order to add more money to another category. That decision process is really helpful because it reveals your true priorities.

I'm sure there are more sophisticated budgeting programs (You're right YNAB is a great one), but I actually found Mint to be pretty helpful. The budgeting setting are very fundamental, but a basic budget is pretty simple, no? Mint allowed me to specify from a exhaustive list of categories which ones were necessary to my budget. It allowed me to add any categories that it might not have included. It allowed me to specify the dollar amount for these categories and then import all my charges and tag them to the appropriate category. Lacking some nuance I'm sure, but it gets the job done.

For me personally, I don't ever use cash. It's just easier for me to keep up with an electronic record. I don't reconcile my receipts to my online Mint account every day, but I try to do it once a week. I keep an envelope for receipts in my purse.

As the month goes along, I evaluate my budgeting success not based so stringently on "Did I spend $105 on clothes this month, when I had only budgeted $100?" but instead I ask the questions "Did I spend more than the $2570 that I budgeted for the whole month?" Allowing for money for move between categories, just so long as expenditures did not exceed my total monthly allowance, helped me a lot to be faithful to it.

Frankly speaking, it's really hard to stick with the budget considering our economy now. It is hard to keep track of it because there'll be times that you have to spend on something that is out of the budget. Even though I can't keep track of it, I just assure that we live below what we can afford to have some extra bucks to spend on something valuable.

Most us here strongly advocate having an emergency fund for just such things. We all know that there's stuff that happens that we can't foresee. It's not a matter of if these things will happen, it's a matter of when. An emergency fund hopefully covers such instances and even when it doesn't, it can provide a valuable cushion. Building and maintaining an emergency fund should be part of your budget.

One other thing. An emergency fund should be for emergencies only, not for stuff you can see coming. For instance, needing a new roof is something you know you need to eventually replace so you have a separate fund for that or if you like, embed that cost into the household maintenance fund. Just because something doesn't happen every month doesn't mean that you shouldn't be planning for it.

Yes, that is definitely key, and it's good that Mint makes this easy. I think the main difference between personal finance programs like Quicken and Mint and budget-first programs like YNAB is the focus: in YNAB, the budget comes first and when you receive income you have to decide where to allocate every dollar. That sounds onerous but it's actually enjoyable because you get to sit in the driver's seat and make decisions instead of having those decisions made for you. And it's not very time-consuming: creating my budget each month takes me 10-15 minutes, in part because YNAB can do a quick-fill based on all my scheduled transactions plus last month's budgeted values or an average of my spending in each category over the past several months.

When I was using Quicken, I found that it was great for looking back to see how I did compared with my budget, but it wasn't very useful for mid-course corrections. With YNAB, the budget stays front and center, and every transaction is immediately reflected in your budget balance so you can shift allocations and priorities as the month goes on.

I heard that Mint was upgraded a while back to use an envelope-type budgeting system, which would indeed make it more like YNAB.

Hmm. I don't "keep track of expenses." I have a spending plan, and spend according to that plan. At the end of the month, anything left over gets thrown at my current goal - currently, paying down debt we incurred when we sold our ex-house.

My spending plan includes expected expenses at a reasonable rate, and then some expenses are variable - such as gas, or groceries, or eating out. I budget $375 for gas/car expenses, an oil change every 2 months, $250 for groceries per month (2 adults), and $150 for eating out ($40 per week or so).

I use cash for the other variables - coffee, lunch while at work, parking fees, an after-work drink with friends. I allocate $7 per day for those sorts of expenses, which works out well. Some weeks I won't spend anything for days, and then I'll spend $20 for dinner out with a buddy.

This works for me. I pay my savings first, pay my bills second, and then set aside funds for the variable items last. As long as I am not in the hole at the end of the month, tracking is non-required.

I think brad starts off with a good point. So let's go from there.

If you are trying to set a budget for the month and then spend money from there, you need to decide how much you are allocating to what area of your budget. If you are really trying to cut down on expenses, you might need to go through the previous few months to see what you're typically spending. For example, if you want to spend $300 on food every month and as you go through the previous months you notice you spend $500, well that's an area to focus on and you sort of know where to set your budget from there.

Secondly, you really need to decide on your method and stick to it. It can be a very tedious process so unless you're dedicated and have a method, you're not going to do it. I actually use an excel file (free for download if you Google "pear budget excel") and I like it because it's very simple.

So what is your method going to be? Well, the first thing I would decide would be whether or not most of my expenses are going to be cash or credit. If it's cash, following the envelope system would make budgeting the easiest---put X amount in an envelope for whatever your period of time is (either weekly or monthly or something like that) and as the money dwindles down, you know how much you have (or have used) at all times. I've thought about having an envelope with some cash in it before and then just jotting down on the envelope something like "9.55 - Groceries" or keeping the receipt in the envelope until I input my data. Once I would input the data, I'd toss the receipt. I haven't done that but I've considered it.

If you primarily use credit, you do not have to wait until the end of the month. If I were you, I would set aside 10-15 minutes once a week to just check the recent transactions and see what you are spending as you spend it. Then input the data at the end of the week and you're done. If you wait until the end of the month, you have a lot more to put in and it ends up feeling like a lot more work.

Generally, I enter data almost every day. It only takes me a few seconds if I do it daily and it's easier for me since I am always varying between cash/credit. I tend to start spending money here or there very easily, especially because I live in the city and there are stores everywhere, so I like to make sure I stay within my goals if I can.

Thanks for all the replies. It helps. We've been keeping track of each penny since Feb. 2011. We know where our troubled areas are and are working on that. We've been under the impression we need to keep a detailed record. The problem is keeping a tedious record is wearing us out because we get behind. Now we've got some direction to go to still keep track without being anal about it. Thanks again to everyone who posted.

Just to add one more suggestion in case it helps ... I use a web-based tool called CalendarBudget (http://www.calendarbudget.com) in conjunction with Yodlee (similar to Mint). CalendarBudget allows me to forecast my account balances at any point in time with various transactions factored in. For example, I enter my car insurance bill which I know will be debited at the beginning of next month ... and I can see whether I'll have a shortfall or if I'll have enough in there after taking into account the estimated deposits from my paychecks until then. I update CalendarBudget approximately every 1-2 weeks. It is without a doubt the best personal finance tool I've ever come across ... so I just recommend checking it out to see if it's something that would work for you too.

I definitely agree to what you say.

To the OP: Glad that you can do the tracking for a year now because I can't really do it on my own. I think when it comes to financial matters everyone should really do their effort which I think lacks us. I'll try to download those software mentioned too so hopefully it really helps

I'm not sure I follow the logic that budgets are hard to follow because of the economy.

If it's hard to stick with your budget (because of unexpected expenditures) then the budget should be expanded and made more flexible.

Here's what works for me...

I put enough money in my main account to cover my bills, gas, savings, debt payments and infrequent but regular expenses like Christmas (annual), brakes (every 2.5 years), tires (every 3 years), dentist (4 times a year), vet (annual), etc. when I get paid (semi-monthly). These are the only things I ever pay out of my checking account. I get a certain amount of cash for other expenses like groceries, haircuts, coffee, laundry, makeup, clothes, TP, cat food and litter, ect. and I don't keep track of these. I pay cash and if I run out, I have to be more careful and maybe eat frozen mystery leftovers until my next check (or use that face powder I didn't really like and threw in a drawer). If there is any extra between the bills and budgeted cash (as my paychecks vary as much as 10%) I throw it at a debt I'm keen on paying. I'm looking at you, overdue tuition from summer!

For the non-cash expenses that I do track, I use Quickbooks and the cash is treated as an owner's draw. I track my finances using the accrual method and run my money like a business just for fun. I had to buy the software for college, so I use it to keep up my skills

So, I guess the short answer is that I don't track all of my expenses, just the ones I can reasonably budget. I probably only record 10 expenditures a month plus savings tranfers.

I have 4 bank accounts

1. Reoccurring bills: Rent, Loans, Electricity, etc.
2. Emergency fund: Never touched, just grows - used for moving and major car repairs in the past.
3. Weekly Expenses: Gas, Groceries, household products, etc.
4. Life Fund: New clothes, Christmas, Birthdays, Oil Changes, Doctor Visits

I set the budget in that order. I make sure I am paying all my bills with a small buffer, then funding my emergency fund and dividing up the remainder between weekly expenses and how much I need for the rest of life's occasions.

I don't track any fund besides reoccurring bills. With that I find out how much I have left over each month and after keeping a reasonable buffer I pay on anything I can get ahead with. When I have extra in my paycheck I put it towards the Life Fund so we have more for kids birthdays or Christmas, but I only do that because I am funding the top 2 funds very well for what we need.

I think Brad's comment is a very good one when he asks why are you keeping a budget ?

It really is difficult to track every transaction , and isn't the point to save money ?

Try to work it "backwards" by paying yourself first . When you receive your paychecks , start by paying 5 % to a savings account that is disconnected from your main checking account . See how you go with that , and if you survive that , move it incrementally to 10 %.

Also, handle leakage . Budget what you spend on coffee/latte's by transfering a set amount to your starbucks mobile account , and then just spend that during the pay period . Leave enough in your checking account for bills and use a separate internet bank account (ING or Ally) with a debit card capability for your spending money for the pay period . Start segregating your money for different purposes , and you will find you have better control of it .

BTW , I just started transferring my spending money to my Ally account that has a debit card capability and love doing that so far . That way , I am not hitting my main checking account with bills , transfers to savings , and my monthly spending .

Once in a while , I download my checking account transactions into excel (I can do this on Chase account ) and then track different categories to spot check my habits .

Also, I have an excel based spending plan and financial plan for the year . I have a plan and at the end of the month I load actuals into all the different accounts to see how my actuals are doing against the plan - and this tracks both assets and liabilities . Isn't that the important part for you to see how much your net worth is increasing relative to how much you thought / planned to increase ?


Don't know if any of this helps , but I find the labor in tracking all transactions is too much for me , I would rather know that I am saving a certain % of my pay and the rest is rather the transactions required to live .

**Marcopolo