How to track your spending (and why you should)

Recently, an old friend emailed me for help with his family's financial woes. The confession that followed wasn't pretty, and included tales of student loans, car loans, unrestrained spending, and empty bank accounts. It was all bad news, which I found rather surprising considering their relatively high income. So, of course, I asked about their fixed expenses. What were they?

We emailed back and forth for quite a while, and he gave a few more details of their situation. For example, their house payment was only around $900. Affordable. Car payments and student loans consumed around $450 each month. Not shocking. Then there were the expenses that everyone must contend with — things like groceries, gas, school supplies, and insurance. It was all rather boring.

Follow the Money Trail

So, what was the problem? This is a couple who easily pulls in six figures and lives in an incredibly affordable part of the country. Their fixed expenses were relatively low, but they were constantly coming up short on funds. Why? Obviously, something was going on, but they couldn't put their finger on it. And neither could I.

“You guys should track your spending,” I suggested. “That's the only way to see what you're spending your extra money on.”

He agreed, and I said that I would check back with them in 30 days. So I waited, and waited, and waited. A month later, I emailed to see what they had discovered.

“We gave up,” he said. “It was too depressing.”

“Depressing?” I asked. “More depressing than being broke?”

Apparently so.

“The kids are always needing something,” he said. “And we hate staying home on the weekends. We want to go out and have fun.”

“But you'll never know where your money is really going unless you track it,” I said. “Maybe you can just start over at the beginning of the month.”

“I guess we don't really want to know,” he said.

It's hard to argue with that.

Sometimes the Truth Can Hurt

Although he didn't give any more details, I think it's pretty clear what happened. They started tracking their spending and were totally appalled at what they found. I've been there. When my husband and I started tracking our spending years ago, we discovered that we were spending over $1,000 on food each month … for two adults and a baby! And that was on top of the other ridiculous ways we were wasting our money. My friend was right; it was depressing.

But, unlike my friend and his family, the severity of our situation actually forced us to change. Tracking our spending made us take a hard look at ourselves and what we really wanted out of life. And we didn't see our failure as a prison sentence; we saw it as a call to action. We used the information we gleaned from tracking our expenses to transform our lives, pay off debt, and completely redesign our future.

But my friend and his family just can't do that right now, and that's okay. The truth is, they're not ready yet. It seems like most people need to hit rock bottom before they feel compelled to take drastic action. And, one thing I've learned over the years is that you can't make people change. They have to want it. They have to take it for themselves. And until that moment comes, you just have to watch helplessly from the sidelines.

Related >> Find the best budget apps

How to Track Your Spending (and Why You Should)

My friend's situation is tragic, but it doesn't have to be forever. I'm sure that he and his family will eventually tire of their situation again at some point and hopefully try again.

But what about you? If you want to get in touch with the reality of your own situation, tracking your real spending is an excellent way to do just that. Sure, you may think you're only spending X number of dollars on your hobbies, groceries, and transportation costs, but are you? Track your spending and you'll know for sure. Here's how:

  • Commit to the cause — Before you get started, you need to commit to your own cause. Because if you don't, no one is going to do it for you. Tracking your spending can be an eye-opening experience, but it's one that won't work without the full cooperation of your family members. In other words, don't do it halfheartedly. Remember, you have to want it.
  • Keep receipts — You're probably going to hate what I'm saying, but you really need to keep receipts for all of your purchases for an entire 30-day period. This can be quite a hassle, especially if you're not used to doing it. However, it's an essential part of the process. Embrace it.
  • Track your spending online — In addition to keeping track of all those receipts, you'll also need to keep track of your online spending. This can include bills that are paid online, online shopping, and even credit- and debit-card transactions. The goal is to get a clear picture of all of your spending, so it's important to include every single transaction you make during the entire 30 days.
  • Tally everything up — Once you've gathered your receipts and online transactions in one place, it's time to tally them up. Start by lumping similar purchases into categories that make sense. Your categories will vary depending on your specific situation; but they'll probably include things like groceries, restaurants, gas, clothes, medical bills, hobbies, and home maintenance.
  • Be honest with yourself — If you track your spending for the full 30 days and are shocked by the results, try not to make excuses for your behavior. Remember why you started tracking your expenses in the first place and try to learn something from the experience. If you don't, you're just resigning yourself to the life you've been living up to now. Remember where that road leads. Nowhere.

The truth is, tracking your spending is the easy part. Learning that you've been completely reckless? Now, that's hard.

On the other hand, you can't change what you refuse to recognize. You can't tackle a problem that you don't even understand. Tracking your spending will probably be the most painful part of your journey. Likewise, it's the most important. Because when you see your own spending on paper — in black and white — you can no longer blame the kids or your busy schedule. You can't complain that you “just need a raise,” or point to high taxes, the government, or anything else as the source of your woes.

We often create our own prison cells, either out of habit or laziness or because we fail to plan. And when we do, it's easy to blame everyone else and think that escape is impossible. And that's why tracking your spending is a crucial piece of the puzzle: It forces you to come face to face with the biggest threat to your financial future.

You.

Have you ever tracked your spending? Did it change your life?

More about...Budgeting, Planning

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Stefanie @ The Broke and Beautiful Life
Stefanie @ The Broke and Beautiful Life
6 years ago

Tracking spending is the first step to making a change in your financial life, and as we know, the first step is the hardest. It’s like any change. We know what we should do, but there has to be a moment where we commit and follow through.

MoneyAhoy
MoneyAhoy
6 years ago

Stefanie,

I agree – many folks are really surprised just how much they spend in certain areas because they go un-tracked. I myself was surprised at just how much we’re spending on daycare when I stepped back to total everything up!

Nick
Nick
6 years ago

I use Quicken Intuit to track my money. Knowing where every cent goes helps me to have better control over my money.

Amy
Amy
6 years ago

I feel for your friend, because tracking spending, which strips away all excuses, as you said, can be very frightening. But you’re so right that it’s also freeing. Once you confront the cold hard numbers, you can move forward (or choose not to). Knowledge is power!

Jake and Allie
Jake and Allie
6 years ago

Tracking is the only way to know where your money is going. We are actually a participant in “Naked With Cash” on another blog and are one of 4 groups that are tracking our money each month online. We are trying to retire soon and are using this to help us figure out how much we are spending per month and if our retirement fund will match our spending habits.

Mrs. PoP
Mrs. PoP
6 years ago

We use mint (and have since it first came out), and as friends have seen me check it on my phone from time to time, they’ve asked me about it and some have even tried it themselves.

CandiRisk
CandiRisk
6 years ago

I was tracking my spending (I use YNAB), but then I moved to a new state while not being able to sell my old house. I fell off the tracking system because I became overwhelmed and now–wow–everything is out of kilter again. I have just now started tracking again and it’s helping, but I can see why someone would want to run away from it, especially if the picture ain’t pretty. Thanks for this post, I will come back to it often when I feel myself slipping off the track (HA). Tracking your spending needs to be like brushing your… Read more »

Brian @ Debt Discipline
Brian @ Debt Discipline
6 years ago

It’s an eye opener when you first start tracking. You realize those little things like lunch out or dinner can really add up.

Phil
Phil
6 years ago

I started tracking finances when I finished school and started a full-time job in 2005. I had just bought a house with 0% down (so two mortgages) and started student loan payments, so I bought Quicken and it helped get things in order.

I was able to draw a picture and target any problem areas. Since then I’ve switched to Mint and pay most things with a credit card so it’s easier to track.

Tim
Tim
6 years ago

Yeah, this is why Quicken or a similar program is such a no-brainer. It doesn’t give me a choice to track spending, it’s all there, plus it allows me to see “budget-creep” from month to month or year to year for a growing grocery or entertainment bill.

Lori
Lori
6 years ago

Tracking our spending to the penny last August was life-changing. We started using YNAB, and our twenty-eight years of sorta-kinda-vaguely knowing what was happening with our finances ended right then and there. Now we know EXACTLY where we’ve been, where we are, and, Lord willing, where we’re headed. It was miserable to see how much money we were wasting, but you nailed it — accepting the call to action has been such a freeing and exhilarating experience. Our marriage is better, too, even though it was already terrific. THE ONLY THING BAD ABOUT GETTING CONTROL OF YOUR FINANCES IS THE… Read more »

El Nerdo
El Nerdo
6 years ago

Tracking is a great eye-opener, and good to do periodically, but tracking all the time can be a real pain. The truth is precious, and it shall set you free, but too much bean counting can drive you bananas. Tools like Mint or YNAB might be great in concept, but all the default categories are ultimately meaningless . E.g., “shopping”. What does it mean? Shopping for what? So you have to customize for your life. And then the mixed receipts, like when you go to a big store and buy 7 or 8 categories in one receipt (auto, clothing, groceries,… Read more »

Holly@ClubThrifty
6 years ago
Reply to  El Nerdo

That’s exactly why I lump all grocery spending into my grocery category (even if it’s light bulbs or toilet paper), and put all other spending in miscellaneous. I don’t have the will or desire to keep track of every individual purchase!

We did at the beginning though, and it was helpful at the time. But, over time, it made sense to loosen the reins a little bit.

El Nerdo
El Nerdo
6 years ago

Hi Holly, Right, relaxing after a careful inspection is good (and careful inspections are essential), but “miscellaneous” is precisely one of those categories that used to drive me nuts. It’s the one that makes least sense. It just tells me I can’t make sense of the expense. What I really need to know with my expenses, is this: a) is this something I am committed to pay, or need for survival, and that I’d have to pay for even if I lost my job tomorrow? Or: b) Is this something I’m spending to enjoy my life, out of choice, to… Read more »

Holly@ClubThrifty
6 years ago
Reply to  El Nerdo

It sounds like you found a strategy that works for you, and that’s all that matters. My misc. category doesn’t bother me at all (We allocate $200 per month to gas and miscellaneous). It usually gets spent on either a) grocery overages, b) birthday presents for birthdays I forgot about, or c) household items. Our spending is so boring these days!

Kingston
Kingston
6 years ago
Reply to  El Nerdo

YNAB has been an amazing, eye-opening tool for me to optimize within my broader needs/wants/savings categories. There is absolutely no need to use the default categories in YNAB, they are suggestions and easily changed. As someone on some other thread somewhere said, you could have a category for “hookers, beer and marijuana” if you wanted one (or 3 separate ones, if that works better for you). For me, the point is to see where the budget is leaky (money going out thoughtlessly, in ways that aren’t important to me or ways that may be working against my own personal goal… Read more »

El Nerdo
El Nerdo
6 years ago
Reply to  El Nerdo

@ Holly– yes, it works for me because it’s *much* more meaningful and less grueling, which is why I offer that it might work for your friend also. You might want to suggest she checks out “All Your Worth”. The thing about that book is that it doesn’t begin by telling you to count your money, but rather it explains to you what kinds of money problems you have when your money is out of “balance” and tells you about different people in different scenarios, and then you’re saying “oh, yeah, that’s me!” Then and only then, once you’re properly… Read more »

Carla
Carla
6 years ago

Hi Holly!

That is a good plan! I was taking each receipt and would have 5 different categories for them: food, cleaning supplies, personal care, non-essential foods (ie. chocolate, wine), “eating out” (salad bar), and the madness went on!

I think I want to delete my Mint account and start over since I made a huge mess out of it…

PB
PB
6 years ago
Reply to  El Nerdo

I pretty much agree with you. I have a very detailed budget, but after things are paid for the month, we give ourselves $ 100 a week for whatever, and we don’t track it. When we run out of money, we stop spending until Saturday and this works out fine. One of my children is a VERY visual organizer and was having a terrible time with her finances and working out what should be paid when and how to manage the income from her three part time jobs. So we took a calendar and wrote in on that when each… Read more »

KSK
KSK
6 years ago
Reply to  PB

That sounds like a great method that you developed for your daughter. I should use that myself!

Johanna
Johanna
6 years ago
Reply to  El Nerdo

Totally agree with all of this. If these people already know that their “must-haves” add up to a reasonable portion of their income, and that they’re running out of money each month, then it must be that they’re overspending on wants. What else are they going to learn from tracking their spending. The thing is, finding out that you’re overspending on wants is actually GOOD news, because it’s relatively easy to get your financial house in order. You don’t have to move house, sell your car, get a new job, or declare bankruptcy. All you have to do is figure… Read more »

Jeff A.
Jeff A.
6 years ago
Reply to  El Nerdo

I think the Needs, Wants, Savings categories are fine for determining your budget, but if you’re tracking expenses to determine where everything’s going, it’s helpful to have more detail (even if for just 30 or 60 days). So if I’m trying to figure out how to reduce my Wants spending by 10%, it’s helpful to know where the most dramatic savings would come from. Do I need to cut back on all my entertainment subscription costs, do I need to cut back on my eating out, do I need to cut back on my clothing/waredrobe spending, etc. But I agree… Read more »

Tonya
Tonya
6 years ago
Reply to  El Nerdo

I agree to a point, but sometimes “needs” like groceries can be cut down dramatically. Seeing that you’re spending $1000 helps you realize that your groceries are not necessarily all “needs.” I think you should track for 30 days, figure out where you are on everything, and make adjustments. If you’re doing Ok with that, you can go to just wants/needs/savings categories.

El Nerdo
El Nerdo
6 years ago
Reply to  Tonya

Right Tonya, not all groceries are “needs”, which is why you pick a barebones survival figure (e.g., the USDA’s $200/person, or yours truly’s rice-and-bean-and-onions-diet of $100/person) and then anything above that amount is counted as a want. St. Elizabeth of the Cherokee Warrens explains that in her book (great, great book).

Jeff A.
Jeff A.
6 years ago

This article is well timed.

I used to track my spending religiously (every purchase from about 2006-2009). Then I stopped.

Last year I took a new job at about a 25% paycut, and I’m still struggling and frustrated that the numbers aren’t working out the way I need them to. Time to get back on this. Sigh.

freebird
freebird
6 years ago

When I turned 18 and left home, I did this because my parents suggested it, but after a few months I realized all this recordkeeping wasn’t necessary because I’m a low spender by nature. Three decades later I still don’t have a budget and I don’t believe I need one. What probably would make a difference is tracking my investment allocation, which I don’t do for the same reasons you list (mainly laziness). I can probably squeeze out an extra couple months wages per year with a properly tuned portfolio.

Aldo @ MDN
Aldo @ MDN
6 years ago

Tracking my spending was what saved me. I always thought I could just keep track in my head but after I started writing everything down I realized how wrong I was. I’ve been able to save so much money after I started tracking my spending. My girlfriend says I go overboard because I have so many different spreadsheets and apps tracking the same thing. I’m just trying to figure out what works best for me. So far I narrowed it down to two spreadsheets, which I keep on google drive and can access it from my house and work, and… Read more »

Stace
Stace
6 years ago

I’ve had and used mint for a long time, but don’t look at it regularly. I just found that there were some times in my situation when it didn’t really work for me…I live with my fiance and we split bills, but I tend to put things on my credit card and he will give me the cash. When I do look at it, I tend to look at the big trends: am I hitting my savings goals, on average, throughout the past months/year? Is my net worth increasing? I have pretty lofty savings goals (half of my take home… Read more »

David S.
David S.
6 years ago

I actually feel bad for the family. I don’t know why, but I love numbers (I am a Software Engineer). I actually enjoy categorizing the receipts down to the sales tax, reading IRS publications with my browser pointed to the Tax Code, running different calculators to plot different retirement scenarios, etc. Luckily the wife is on-board too and like to see the pretty graphs and doesn’t mind entering a receipt every once and awhile. Anyway, as for the family. As we have in software, you cannot know if you have a completed design/app unless you have measurements to say so.… Read more »

Julie
Julie
6 years ago
Reply to  David S.

I feel bad for them as well, mainly because of this statement “And we hate staying home on the weekends. We want to go out and have fun.”

Why is it necessary to spend a lot of money to have fun? Beyond that, how is being broke “fun”?

getagrip
getagrip
6 years ago
Reply to  Julie

This is the real reason they not only aren’t ready but they won’t make any kind of change in their lives until something smacks them square in the face. If no absolute crisis appears, they may never learn.

John Schneider
John Schneider
6 years ago

It wasn’t until we categorized our spending for the previous year that we realized that we make decent money. It was our spending habits that were ruining us. Ever since then, we’ve tracked our spending religiously. Every pay day, twice a month, we update our cash flow and itemize our spending. This helped us pay off our debt and start investing. Great article and important points!

Wyoming Gal
Wyoming Gal
6 years ago

We use a credit card to pay for all variable expenses – such as gasoline, travel expenses, food, gifts and household supplies. Of course, we pay the balance every month before the due date. I tally all expenses by category from the credit card bill – usually once a week or so – and of course I budget the amount to pay off the balance weeks in advance. This works well when my husband is working away from home for several weeks. I know what he is spending as well as what I am spending. We spend very little cash… Read more »

Rail
Rail
6 years ago

Greetings all! This is a good post that really harkens back to the bedrock of GRS. Ever since I found GRS and then was turned on to Dave Ramsey I felt like I had been vindicated for being called a tightwad all my life. Controlling expenses is the biggest part of GRS, you could make 10 Gazillion bucks a year but if you spend 11 Gazillion your still in the hole-broke, busted, kaput! For a old timer like me (44yrs.) who came along before computers, using cash and checks was just how things were done for paying day to day… Read more »

Laura
Laura
6 years ago
Reply to  Rail

(Late to replying to this article, thanks to a hectic week that kept me off reading blogs…) At 51, I’m another old-timer so I get where you’re coming from and I also prefer cash where possible. I confess that I REALLY like direct deposit (which also waives the fee on my checking account) and online bill paying (although I always go in and do it manually, no automatic stuff). But only the mortgage and utilities get paid online; gas, groceries, and the rest get paid in cash. Since I started tracking my spending in 2001, I use an Excel spreadsheet… Read more »

Martin
Martin
6 years ago

I use mint, and I’m very happy with it.
It seems to give me the clearest picture of my spending with a minimum amount of my time catagorizing.
All transactions from all sources (debit card, and automated recurring charges are pretty much all the transactions I have. Plus some misc checks. )
I don’t use cash generally. Mainly so all of my transactions are captures by mint.
Really helped me see where the $ was going,

Waverly
Waverly
6 years ago

I feel bad for the kids. The parents are willfully looking the other way, because to find out the true depth of the hole they’re digging for themselves is depressing. I get that. But the kids don’t really have a choice in the matter. They basically are at the mercy of their parents’ crappy choices. On top of that, when you’re a kid, you tend to think of whatever your parents do as “normal.” So the kids are going to think that having $0 in savings, having no plan, having no retirement fund, having no emergency fund, etc, is normal.… Read more »

phoenix1920
phoenix1920
6 years ago
Reply to  Waverly

Very, very few kids know their parents finances, how much the parents have in savings, what the parents’ retirement plan is, or even what their annual salaries are. My husband learned this first hand when he gave high school students a spreadsheet project requiring them to create a balanced budget and the students were required to talk over their budget with their parents to ensure it was realistic. Talk about receiving complaints!

Waverly
Waverly
6 years ago
Reply to  phoenix1920

That’s true, although my mother was always talking to me about money and finance. Not in detail, as in, how much money she and my dad made, but in general. For example: you must pay every bill on time, you must save more than you spend if you want to get ahead, you must save, period. You must give some money away. If you want to buy things that cost more than you can afford with just your allowance, then you must get an after-school job. If kids hear this kind of stuff, even without knowing the details, it’ll help… Read more »

Jenny
Jenny
6 years ago
Reply to  Waverly

I couldn’t agree more! They shouldn’t be hauled over the coals for past mistakes, but choosing to remain wilfully blind is not the mature path to take. For the kids’ sake, I hope this couple reconsiders their priorities, and soon.

I have to take issue with one comment in the post: “My friend’s situation is tragic”. No, it really, really isn’t. It’s unfortunate, yes. It’s also probably quite easily solveable, with a little fortitude and effort. But it is decidedly not tragic, and describing it as such is demeaning to those who find themselves dealing wiht a true tragedy.

Tracy
Tracy
6 years ago

I recently started tracking my spending and saving in a spreadsheet and it has definitely change the way that I spend. My fiancee and I now go out to eat half as much and I am much more scrupulous in my purchases knowing that I am going to have to track them afterward.

One thing I haven’t quite figured out yet is how to track my credit card spending/payment without it being figured in twice (and still showing which categories I spend on) but I’m sure I’ll think of something!

Rail
Rail
6 years ago
Reply to  Tracy

Tracy. You might have to track your C.C. spending in a analog method(pencil/paper) just like us old farts! Lol! Have fun.

Eric Duminil
Eric Duminil
6 years ago
Reply to  Tracy

You might want to take a look at http://www.grisbi.org/
It’s a great open-source program to track spending. It covers all my needs.

Tracy
Tracy
6 years ago
Reply to  Eric Duminil

That looks great, I’ll check it out. I think I may also just mess with the formulas in my spreadsheet. I host it on googledocs so I can access it on my phone (or from anywhere) which I really like. Much like JD, I just got rid of my consumer debt and have reformed my spending, and thus just got a great new rewards card that I want to use on as many purchases as possible (to get as many rewards as possible). But my plan is to pay off whatever I spent that week on Sunday, so that I… Read more »

Laura
Laura
6 years ago
Reply to  Tracy

Tracy – I don’t know if this will work for you, but what I do is to have my spreadsheet divided into roughly two parts: income and outgo. I put credit card charges in both places. Under “income” I have two rows for my two credit cards: what I spent in Week 1, 2, 3, 4, and total (SUM 1,2,3,4). When I charge something (in my case, either heating oil, car repairs, or an online purchase such as a present), the amount is listed as income in the appropriate cell and again as outgo in the appropriate spending category cell.… Read more »

Jenn
Jenn
6 years ago

It can be depressing to see where your money actually goes, but it’s well worth it to plug those holes. It can also open your eyes to problems that you never would have guessed. As an example, my credit card (Slate from Chase) uses their Blueprint service to help you track your money and categorize your spending. While I normally take a more active role and track every penny myself, I realized that I had been missing a huge forest by focusing on trees! What I’d thought was “standard maintenance” on my car and therefore fully justified turned out to… Read more »

Tina
Tina
6 years ago

I use Mint and have for about a year. It has been really great. Food expenses are our spending weakness too so when food budget gets close to exceeding, I can scale it back just by cooking stuff that is in the freezer already or have cereal night to finish off the close to expired milk. Recently, I sat down with my family(hubby and 2 teens) and explained if we want to take a nice vacation, we need to stop eating out and stick to meals at home. Everyone is ok with this and already have most of the money… Read more »

redstar
redstar
6 years ago

I just did a check-in on our spending yesterday. It can be a serious wake-up call. Like a thousand cuts at your budget that go unnoticed til you run out of $ before the month is done..still working on our biggest variable category: food, since we are foodies, but we have learned to max our Roth contributions ( we thought we couldn’t do it, but guessing can be a deadly step to retirement, would NOT recommend!!!) . Still don’t like seeing the tax bill at tax time, but I can see where there’s hidden money in your budget if you… Read more »

Matthew
Matthew
6 years ago

The best way to track your spending is to Outsource it. Less mistakes and also the cold hard truth, that you cant try to change. MINT.com. Saved my finances.

phoenix1920
phoenix1920
6 years ago

I find tracking too depressing–because it’s too time consuming! I don’t have a smart phone because I don’t really have a need for one. While smart phone apps like Mint seem to be helpful, it seems odd to me to spend $50-60 a month for a smart phone plan (i.e., $600-720 a year) so I can track my financial expenses. So I keep my receipts, which accumulate in a basket until it’s overflowing and then I feel overwhelmed. While so many people give advice like “use Mint,” I just haven’t found a way to reliably incorporate this into my daily… Read more »

Rail
Rail
6 years ago
Reply to  phoenix1920

Phoenix see my post above. Put your PHYSICAL check in the bank. PHYSICALY write out checks to pay bills. Use “real” money. It might not get you there 100% but its a start. I don’t have a smart phone and I can barely use a computer but if I can save money without them you can too! Russel Means said something like “The modern world has made the normal, abnormal. And the abnormal, normal.” Don’t listen to the TV telling you how easy it is to “just let us take care of you”. Take care of your money all by… Read more »

nicoleandmaggie
nicoleandmaggie
6 years ago
Reply to  phoenix1920

Mint isn’t just a smart phone app. I don’t have a smart phone and we use it from the regular computer.

Jeanne
Jeanne
6 years ago

I didn’t start by tracking spending by categories. 10 years ago, when I was deeply in debt, I was getting overdraft fees every month. So, I started an excel sheet to track every ATM advance, bill payment, check card and credit card purchase to see how much I was expecting to spend on different things over the next month, so I could see if I needed to move money from savings, or maybe wait on buying something until after the next paycheck. After I had been doing that a while, I decided to see what the money was going to,… Read more »

Brandon
Brandon
6 years ago

Great post! Me and my wife a few years ago got on a budget and it was one of our best decisions. We found mint which really triggered our desire to start living on a budget. We too were shocked at what we spent on food! Mint.com is a great free resource that can help with starting a budget. I have found it is a day to day battle and will to remain on a budget. Consistency is key !

Saver_Dude
Saver_Dude
6 years ago

All these apps and websites to help you track your spending are still too frilly. They don’t address the mechanical / physical reasons for overspending. A few easy steps. 1. For one month disable automatic bill payments. Having companies take money out of your account before you can see what they are charging you for is like being conned! Don’t mistake CONVENIENCE with CONTRIVANCE. Have the bills mailed to you or print them out each month and sit down for one minute to scrutinize each charge. 2. Cancel memberships, donations and subscriptions to things that you don’t make full use… Read more »

Yankeegal
Yankeegal
6 years ago
Reply to  Saver_Dude

Lots of good advice here. I was that person at Walmart spending way too much. A little planning and a once a month trip has cut that expense dramatically!

Rail
Rail
6 years ago
Reply to  Saver_Dude

Saver Dude is right on the money!(Ha ha!) Being on automatic pilot for so many things in life like bill paying, auto deposit, auto withdrawl, etc. can make you complacent. It may be the cynic in me, but if banks and businesses are beating the drum for “automatic this and that” then be very wary of what is really going on.

abc
abc
6 years ago

I view tracking expenses as a life time activity. Something you learn from your parents and teach your children. When I was a kid, about once a month my Dad would bring a calculator home and do the family’s books. By the way, the calculator was not even electric; it had a crank on the side that you pulled down to do the calculation. From observing him, I just assumed that it was common sense to track your expenses and to know where your money was spent. So, over the years, I did my expenses with pencil and paper, and… Read more »

Catarina
Catarina
6 years ago

+1 using YNAB to track and plan expenses here. I also think it was the best money I’ve spent in years!

Jason
Jason
6 years ago

I use Mint to track all my spending. It ties to my accounts, cards. And I’ve been doing it for a while now. I saw bad spending but until I broke up with someone who didn’t want to change their habits it was hard to fix. Now I follow a budget and often come in under budget, saving any excess. And I’ve cleared away some small debts that had started adding up. And I feel so much better and on top of things. I know where every dollar goes and even track when and where I spend cash.

Eva
Eva
6 years ago

This post cannot be posted on a better time than today. Yesterday, while I couldn’t sleep, I suddenly wonder why am I saving less than 10% of my income. I jolt down all the necessity (rent/mortgage, insurance…etc) but the total still doesn’t add up. I used MINT constantly, but if anyone has use it, their categories truly sucks (for one, I don’t have kids, but have elderly to take care? – where is that?!). And while they have overview and such, they don’t have month to month or year to year, for me to understand what is truly happening to… Read more »

Stephanie @ Six Figures Under
Stephanie @ Six Figures Under
6 years ago
Reply to  Eva

Eva, I was having the same problems and frustrations with Mint. I wrote about it and the wonderful solution I found. (I don’t know if posting links here is taboo, so you can click on my name to get to it). Hope that helps.

cathleen
cathleen
6 years ago

I’ve been using Quicken for 20 years or so. I also owned a business and used QuickBooks; knowing where your money goes is critical or your business won’t survive. We use debit cards for everything (and credit cards for online purchases) and Quicken learns your categories quickly so you don’t need to spend time doing that. You can correct or change as needed, which happens rarely for me. Also, critical for me is seeing cash flow. I can see 3 months ahead in the register based on my income / expense plans and if I see red I can make… Read more »

Ash
Ash
6 years ago

I also use YNAB and absolutely love it! I am now debt free, have a lot I money in savings, and I’m happy with my financial life. Ignoring kept us in debt for so long. It’s hard at first, but becomes much easier over time.

Marie
Marie
6 years ago

Tracking our spending was depressing not because we were being wasteful, but because we realized how much of our money was being sucked up by stuff that was NO FUN WHATSOEVER. Constant car problems, big medical deductibles, home repair…I almost prefer thinking I was wasting my money on leisure. At least then I felt happy and pampered.

Laura
Laura
6 years ago
Reply to  Marie

You and me both! I’ve tracked our spending religiously for about 13 years, but still struggle to stay out of the red for this very reason. I’m not buying too many lattes; I get walloped by repair bills. And we’re paying too much of our income for the mortgage, but moving is not an option. But keeping a spending record still helps a lot. If nothing else, it helps justify when certain purchases just cannot be made (e.g., refusing to buy the new car that DH wanted until it was clear the cost of repairing the old one exceeded what… Read more »

Crystal
Crystal
6 years ago

I tracked my spending for one month and although I consider myself to be pretty good with my financials, it allowed me to see where I could cut back and send extra money to pay off my last student loan.

Asif
Asif
6 years ago

I never tracked my spending, only how much I made and how much I had left in the bank. My savings rate was leftover/income. Since Nov’13, I started using a free android app, Toshl and I figured how much I have been wasting on eating out… I live in a developing country and can’t track bank accounts over the internet, so Mint/Quicken are not an option here. With Toshl I need to input all the spending every day, but its rewarding to know where my hard earned pennies are going 🙂

No Nonsense Landlord
No Nonsense Landlord
6 years ago

I use Quicken, track ever receipt. Then reconcile every statement.

I am surprised at how many people never want a receipt from a purchase, not even a bank deposit.

You have to know what you are spending!

Laura
Laura
6 years ago

So many people nowadays do NOT want receipts that I find it difficult to get businesses to provide them to me! I can’t count how many times I’ve made a purchase, only to have the clerk grab the receipt and toss it immediately in the trash. I then hold up the line while they either root through the trash to find my receipt or stop to print another one.

And yes, all my receipts for cash purchases, once logged into my spreadsheet, are recycled, not thrown into a landfill in a plastic bag.

Carla
Carla
6 years ago

If anything you may need to do a return or an exchange. Yesterday my DH was paying for a few items of clothing at the department store for me. When the clerk asked if he wanted a receipt, he said no and I said yes.

We talked about the importance for me to have the receipts for such purchases, not only for budgeting, but in case I need to take an item back.

Amy
Amy
6 years ago

I used to constantly run out of money about a week before payday. I tried online programs to track my spending, but I found that writing down every single expenditure in a notebook helped the most. I gave myself an approximate budget in my variable spending areas (groceries, “coffee”, utilities, pet food and care, hair care, baby expenses, and “fun money”). Fixed expenses like rent, baby’s day care, emergency fund, and savings are on automatic for debiting or transfer to another account. The first month or two, I went over budget – mainly due to purchases on clothes or other… Read more »

leo r.
leo r.
6 years ago

I started working outside of my home country for 1 year and 2 month now. And since my first day here up to last night, i’m still writing my daily expenses and it really helps me a lot in evaluating my financial status and decisions in the future.

Even Steven
Even Steven
6 years ago

I used to only look at the ATM or use my online banking. My thought was if i had enough money in the bank who needs to keep track of spending.

Like many people I wasn’t getting anywhere, I then started making budgets and spreadsheets and finding where everything was going and how I could save some money. Get Rich Slowly and Dave Ramsey helped wake me up in this process, I’m financially better off for it today.

Teinegurl
Teinegurl
6 years ago

3 years ago after a year of being divorced and me just starting a new job I started to track my expenses. Literally I had no clue what to do because i always left the finances up to my (ex) husband. Suddenly all the finances was left up to me and for the first year I had no idea what to do. I started this new job i asked my coworker for help -How come i keep paying the bank fees and running out of money? She told me well when was your cell bill due? Car ? Cable? How… Read more »

kpsetdec
kpsetdec
6 years ago

We track all of our bills and monthly expenses with Quicken and gave ourselves a weekly cash allowance to cover what we thought our day to day expenses would be each week. That was fine for a while but it wasn’t always clear where all that cash went. I found a great app called XpenseTrkr. You can divide it into logs – I do a monthly log- and each time I purchase something I get out my phone and enter it. Then I created an excel spreadsheet with the different categories I’d chosen. At the end of every month I… Read more »

zac
zac
6 years ago

I started tracking my spending a little over a year ago. It truely is the most important step in personal finance in my opinion. It is so important for so many reasons. In particular it helped me communicate with my wife. When the numbers are right there and you can BOTH see them you can BOTH work together and come up with goals. I tracked for a year on excel. I found it useful to create projected averages and current averages. That way not only can you see what you’ve been doing but what trajectory your on. To be honest… Read more »

Kathy Fernandez
Kathy Fernandez
6 years ago

Very good post. I absolutely appreciate this website. Stick with it!

zac
zac
6 years ago

I have been tracking my spending for some time but have been doing it more thoroughly for about a year. It has been an amazing tool for learning about my finances. I find that it is helpful to have, or design, a spreadsheet that will give you projected averages. That way you can see what trajectory your spending is on in a given category. It’s also super helpful to demonstrate what is happening to others who are involved with you finances, ie: spouses. I just use excel but have found that I actually enjoy tracking now. You have so many… Read more »

Nina
Nina
6 years ago

YNAB user here. I wish personal finance was taught in school. It’s only been a year since I started taking it seriously as money was always considered boring and difficult. Looking back a few years ago I owned a house together with my then boyfriend and I just let him handle everything. Today I live by myself, renting a little apartment, and I know exactly how my finances look and where I am headed. I grew up with a mix of frugality, as my mom didn’t have much money, but my dad would spoil us with material gifts. The frugality… Read more »

John
John
4 years ago

It totally changed my life. Going through that one step became the springboard to taking more steps and now I’m in the best financial shape of my life

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