Why I no longer track every penny I spend

When I struggled with money during the 1990s, I had no clue what I was spending each month. I made my financial decisions based on my checkbook balance: If there were a few bucks left, I'd find ways to spend the money; if my balance was close to zero (as in $10 or $20), I'd turn to my credit cards. Where did this money go? If you'd have asked me, I wouldn't have known.

As part of my financial turnaround, I learned to track my spending. In fact, this was one of the most effective tools in getting me to change my spending habits. Every week, I'd sit down at the computer to enter my receipts into Quicken. Once or twice a month, I'd play with the graphs and reports, keeping an eye on the problem spots. By tracking every penny that I earned and spent, I became more aware of my habits.

But something's happened lately.

Last summer, I noticed that my discipline seemed to be lacking. Instead of logging my spending every week, I'd often go two or >gasp!< three weeks without using Quicken. At first, this made me fret. “Something's wrong with me,” I'd think. “If I don't track my spending, I'll lose control.”

You know what? I didn't lose control. Even if I went an entire month without entering my info into Quicken, my spending stayed in check.

Last fall, as I was writing my book, things got even worse. Sometimes I'd go six weeks without remembering to enter data. And then 2010 rolled around. Here's a shocker: Since doing my year-end numbers in early January, I haven't logged my spending once. And just last week, I stopped saving every little receipt. (It's been years since I tossed out a grocery receipt before coming home.)

Some of you may be alarmed by this. A few years ago, I would have been concerned, too. But I've actually found that my scofflaw attitude is liberating. Over the past few months, I've seen that I'm perfectly capable of practicing conscious spending without logging every penny I spend.

Although I no longer track my spending in detail, that doesn't mean I'm ignoring my finances entirely. Hardly! I still check my statements every month to be sure there's nothing goofy. Plus, I double-check to be sure my account balances are continuing to grow. In a way, it's as if I've removed the training wheels and am now zipping around the driveway on only two wheels.

This reminds me a little of my return to credit cards. In 1998, I destroyed my credit cards because I couldn't use them responsibly. For nearly ten years, I lived without a personal credit card. I was afraid to trust myself. But about three years ago, I decided to take a chance. I set some ground rules and signed up for a single card. Since then, I've not only used credit responsibly, but have actually learned that it can make life more convenient.

So maybe leaving Quicken is the next step. Maybe part of the third stage of personal finance is recognizing that my financial discipline has become ingrained, that I no longer need certain redundant systems because the internal systems are working just fine.

Or maybe I'm fooling myself.

I'd love to hear from other GRS readers. How many of you track your spending? What's your financial situation like? Have you found that you've “outgrown” Quicken and Mint and similar tracking programs? Also, I'm dying to know: As my mental relationship with money matures, will I find that I've outgrown the need for other techniques that helped me get out of debt?

Sidenote: My wife has never kept detailed records. When I told her about this post, I asked why she's never kept a detailed spending log, but just made broad notes in her checkbook register. She gave me a look: “I don't need to track my money,” she told me. “I never spend more than I have.” (Plus, she pointed out that she “pays herself first” by saving nearly 30% of her paycheck for retirement before the money reaches her checkbook.)
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Jonathan Degani
Jonathan Degani
10 years ago

I think you’re going from one extreme to another. Just because you don’t need the detailed analysis of quicken does not mean you should ditch tracking your money altogether.

Perhaps use something simple like an excel sheet where you divide the money you earned into a spending plan and see how much you have left in each category (maybe as few as 5) as you spend throughout the month.

So take the training wheels off, but put up a small barrier to make sure you don’t end up in the middle of the street.

Mrs. Money
Mrs. Money
10 years ago

I have tried so many times to track my spending to the penny, but it never works. I’m disciplined like you, so I don’t fret. 🙂 It is interesting to see where all your money goes, though!

Dustin | Engaged Marriage
Dustin | Engaged Marriage
10 years ago

We have also “graduated” to a point where we no longer keep every receipt and track every penny. We were very intense about tracking during our journey of paying off $54,500 in debt and then for about a year afterward as we built up our emergency fund. During that time, we kept track of our spending and budget on a constant basis through some homemade spreadsheets, and we held onto *every* receipt. Today, we use Mint, which tracks everything for us electronically, so we only have to hold onto receipts whenever an item is one we may wish to return.… Read more »

Luke
Luke
10 years ago

I think a lot has to do with personality type. While I know I would be able to keep spending in check without tracking everything, my curious side really wants to see monthly statements to see how I’ve done and how much progress I’ve made toward financial goals. Since creating and using NeoBudget, it’s not even a pain. I import my bank statement (so I don’t have to save my receipts). It takes about 15 minutes every week or two. Like I said, I think this has more to do with personality type. Both my wife and I like to… Read more »

Michiel
Michiel
10 years ago

I’d say, doing what it takes depends on the situation you are in. If you need to make each dime count, count each dime. Once you have a more comfortable position, you can relax more. I used to track all expenses in detail for a few years as well, but nowadays I do a monthly check of my overall financial net worth (i.e. simply summing all checking, saving and investment accounts). This gives me a ballpark figure on how we’re doing and is enough to keep track of our yearly financial goals. The basic question for this is simple: what… Read more »

Mike Piper
Mike Piper
10 years ago

Since we use mint and essentially all of our spending occurs via credit card, it’s tracked automatically and sorted into categories.

Every 6 months or so we look at it to take note of trends (both good and bad) and to see if anything could use an adjustment.

It’s much like how we invest: mostly hands off, only checking on occasion, and generally making small adjustments if any.

Cara
Cara
10 years ago

I handle finances like your wife. I don’t keep detailed spending records. Instead I pay myself first, and live on the rest. Even with my lackadaisical accounting, I manage to save 40% of my income every month and often still have money left over at the end of the month to add to my savings. I do a checkup every 6 months or so to make sure that my net worth is on track and to find areas where I can be more frugal, but that’s about it.

Rob Bennett
Rob Bennett
10 years ago

It’s not as important to track every penny after you’ve done it once because from that point forward you have a good sense of where the money goes (which is the true benefit of budgeting — knowledge). Things will change over time, though. You will drift over time. So it will again become important to track every penny. It’s probably easier to just stay in the habit than to drop it and then need to relearn it.

Rob

Andrew
Andrew
10 years ago

just this month i started using mint.com and i love it. i’ve always been a numbers person and financially smart. this website allows me to track my spending with little input and lets me watch my investments grow all from one page. i’ve even managed to convince a number of my friends and my girlfriend to use it. the biggest problem i’m having now is that now i feel like i need to categorize every transaction. if i make a cash withdrawl i find myself trying to figure out where i spent each dollar. i’m closing on my first house… Read more »

Allison
Allison
10 years ago

I don’t track our spending anymore. By the time my husband and I paid off all our $35,000 in debt, our saving habits had become pretty much ingrained. Now we just pay ourselves first through automatic deductions at about 20%, and then we spend the rest. Without tracking our pennies we’ve saved an emergency fund and saved for our next car.

JD, I think as long as you’re paying yourself first and living off the rest (without resorting to credit cards or overdrafts) then you’re fine. Remember your own motto…do what works for you!

Austin Frakt
Austin Frakt
10 years ago

I let Quicken do the tracking for me. I’ve got a technique I haven’t seen anyone else discuss. I wrote it up in a post: http://theincidentaleconomist.com/budget-tracking-and-projections-with-quicken-tricks/

Matt
Matt
10 years ago

99% of all of my transactions occur electronically or with a credit card, so for me, tracking is nothing more than a 10 minute job once a month. At the end of the month I’ll download all the data from my bank & cc’s, import them into my software of choice, then just give everything a once-over. If everything looks good, that’s the end of it, but if I slipped in a particular category, it shows me where & how badly. I agree that if I had to manually enter every receipt from cash purchases, I wouldn’t do it either.… Read more »

Jen
Jen
10 years ago

I’ve tried a few times to track my spending in detail, but it drove me up a wall and I’ve decided that it’s just not necessary right now since I’m debt free and make plenty to cover my expenses and certain minor luxuries. I’m content to save for retirement via automatic paycheck deductions, and keep an emergency savings account and separate savings accounts for upcoming large expenses (sharing monthly surplus from the checking account). Those account balances should never go down except when paying for their intended target. If I start having trouble paying normal bills out of my checking… Read more »

JonasAberg
JonasAberg
10 years ago

I track every single penny I spend. Not because I *have* to, as I’m in a pretty comfortable position, but because I *want* to. I want to become even more effective than I already am and cut unnecessary costs where possible so I can spend on other things I’d rather have. I save a good chunk of money already so anything extra I want needs to come from “fun money”. Generally I don’t have a set budget for saving for that so whatever I can save extra per month is my fun money. Sometimes it’s 50 bucks, sometimes 100. However,… Read more »

Kestra
Kestra
10 years ago

I’ve always been good about spending less than I make, but I did start tracking about 6 years ago. I really like charts and numbers though, so I do it more for fun. Also it’s interesting to have all the data from so many years previous. My husband and I only spend about 50% of take-home so we certainly could track less, but probably won’t stop any time soon. I am interested in calculating our personal inflation rate as that will be important in regards to early retirement. Also, as we don’t currently have a joint account, I track in… Read more »

John
John
10 years ago

I track every purchase I make. Every. Single. One. Even buying a $0.50 coke from the vending machine. For me, what’s worked is not setting myself up to have to do accounting later in the day. It makes sense that you would gradually move away from tracking your expenses since you’ve essentially given yourself homework to do. What I do instead is to use a spending application on my iTouch. As I make the purchase, I whip my itouch out of my pocket at that moment, fire up the mini-app and log the purchase immediately. I can then dump the… Read more »

bon
bon
10 years ago

I don’t track spending now but have many times in my life — I think it is dangerous to couch tracking your spending as a sign of financial maturity – I’ve never even come close to spending more than I have, but still think it is important to track spending at times — ok, what am I talking about, what times? Life changes. Whenever I have moved, when my husband and I first started living together, when I first got a job out of college — any of these lifestyle changes are when I think it is important to really… Read more »

Alexandra
Alexandra
10 years ago

When I was in university, tracking my spending was a must because my budget was so tight. Then I was paying off student debt, so I still watched my money closely. Now that things are comfortable, I no longer track my spending (and I haven’t for about seven years now). I “pay myself first” by automatically putting a percentage of each paycheque into RRSPs and a long-term savings account. As for the rest, I don’t worry about it. After years of knowing my expenses, I can go through the whole month of usual expenses like groceries and buying lunch and… Read more »

Chickybeth
Chickybeth
10 years ago

Maybe if you have so much income that you can’t possibly spend it all every month you could stop tracking your spending. However, this reminds me of Weight Watchers in that the people who always have to re-start the plan are the ones who stopped counting calories over time because they thought they knew how much they generally ate. We all forget about “binges” now and then that really add up.

I track my spending down to the penny because it is extremely useful when trying to figure out how much to put aside for car repairs, insurance, etc.

Calliope
Calliope
10 years ago

I keep truck of every.cent.spent for more than 10 years now. I like it. No, I love it. As a student it helped me not overspend. As a first-time worker it helped me set goals and actually reach them. As a mother and wife it helped us to not get afraid of the 30-year loan over our head and build the house of our dreams, travel and -wishfully- educate our children as we decide. I keep a very elaborate and , over the years, refined excel spreadsheet. It has everything: monthly statements, everyday statements, credit card spendings, links from one… Read more »

Aaron
Aaron
10 years ago

Mint is a great lightweight solution. Once you get it set up you can just coast and have it email you about unexpected spending or high incoming bills. We switched last year when our son was born, and it was a good thing. We went 3 months without updating once, and mint just kept on chugging without us. We picked up where we left off instead of having to deal with the backlog of transactions that quicken produces. I still haven’t found a great way to purposefully save (pay self first, that is) in the budget section, though.

Jonathan
Jonathan
10 years ago

I still do all my Quicken data entry for checks and credit cards. But, when it comes to cash, I only track the bills going out or in and not the change. So, if something costs $1.20 and I give $2 dollars, it costs $2. If I give a single dollar and have the change, it only costs $1. What my cash tracking tells me is what is in my wallet. That is what I thought you meant by the title of the post.

xed
xed
10 years ago

I think that reaching the stage of “not tracking everything in painful detail” is natural for someone who feels they are responsible enough not to have to do it anymore. The key is “for someone who feels they are responsible”. Feeling responsible and being responsible are two different things. I believe that it is mandatory to maintain some form of self check that is more than just looking at your checking account balance. Personally I use Mint.com and I think it’s perfect. It tracks everything in painful detail so that I don’t have to. I “check in” with mint every… Read more »

Rosa Rugosa
Rosa Rugosa
10 years ago

We were never really irresponsible with money, just not as wise with our resources as we could have been, but I’ve always tracked all of our expenses, even when we spent every cent we made. I don’t think I will ever stop tracking financial details because that is how I am; I like keeping lists, budgets, charting progress, etc. It doesn’t take me that much time and I actually enjoy doing it.

AG
AG
10 years ago

I use Quicken ‘Online’ which saves me the effort of entering each recipt manually. Quicken Online pulls all the transactions from the online bank account I’ve linked it to. At 24 I think I am doing pretty good, have paid off my car loan and have hefty emergency funds in addition to a few CDs.

Lately my eating-out expenditures have been reaching skies so I am trying to take hold of them. I check my Quicken account couple of times a week and think that keeps me on the track.

JakeIL7
JakeIL7
10 years ago

Tracking spending is one of the two things I really like about my credit cards. As long as I use them for as much as possible (I might spend $40 in cash a month) I know exactly where my money is going. If you pay it off every month, a credit card may be the best way to go when you are at this stage of personal finances.

ArandomPerson
ArandomPerson
10 years ago

Nice to read this post. This Jan. I simplified my budget from 12 major categories (each with 10 to 25 sub-headings) to a single sheet with 15 categories. I record and do the math all by hand and have done the more complicated one every two weeks, in multiple color inks (red, green, & black)since 2000. It took me about 1-2 hours each Sunday to tote items up, check the math, plan a bit, do bills etc. Now this year I have to force myself not to record every penny (oh, I keep all my receipts in big box just… Read more »

Adrienne
Adrienne
10 years ago

I would caution you not to give up tracking entirely. Having an accurate picture of what my budget is makes life changes a million times easier (it’s hard to know what you can live on if you don’t know what you are spending). If you have (or want to have) a change in income it’s essential to know what you spend. Also it can be imputus for change (as when you looked at your restaurant spending). Perhaps you just don’t need to keep as detailed a record. Broad spending categories can still be helpful.

Julie
Julie
10 years ago

I’m like Luke. I’ve never really had a problem managing my money, but I’m so curious that I’ve been tracking all my spending and income since I started college, about 10 years ago. I use Quicken because I can see all the cool graphs and things. I’m not really worried about being more efficient or running through all my money; I just like seeing where it goes.

Shalom
Shalom
10 years ago

Like Chickybeth (@15) I thought about diets and weight maintenance. But I think that after you’ve lost the weight or debt you’re trying to lose, you don’t have to keep counting calories or tracking your spending. Instead, after a diet you keep your new, healthy habits up and you weigh yourself periodically to make sure it’s all still working. With money, you keep your new, GRS habits up and you check your finances periodically to make sure it’s all still working. When we were obscenely in debt, and for a while after, I tracked every penny; but I stopped that… Read more »

Mike
Mike
10 years ago

I do track every dollar (not penny, hehe) that I spend and I don’t find it to be much of a chore.

Though, I’ve also started to use Mint to track all of my non-cash accounts and it works wonders! I can see myself “graduating” from tracking expenses in Excel to checking Mint once a week to make sure that nothing out of the ordinary happened.

Seth @ Boy Meets Food
Seth @ Boy Meets Food
10 years ago

I’m not overly detailed with my tracking. I make ALL purchases with a credit card, and I just keep a spreadsheet where I categorize each purchase. I don’t break down each item, just put the total in a broad category. Mainly, I just wanted to get an idea of how much I spend on groceries and at restaurants. I found that even though I thought I was being conservative, there was a lot of room to cut back.

Anna
Anna
10 years ago

Really enjoying the discussion here as I’m only just starting to get into the habit of tracking every penny (student, soon-to-be-graduate).

Is there anything like Mint that would work for UK account numbers? I’m currently just using a spreadsheet in Excel but would love it if I could have graphs and trends easy to see in an already pre-defined programme/website.

sjw
sjw
10 years ago

I have a biweekly tracking system in Excel, though sometimes it falls behind my a month or so. It has very broad categories. Visa, cash, phone, internet/tv, electricity, gas, home insurance, personal insurance. The Visa and cash are to calculate a 6 month rolling average, make sure we’re not lifestyle inflating. The others are to make sure that we actually got the bill and paid it. I also track housing costs on a separate sheet. Since that money isn’t from our general cash flow, but instead coming in large chunks from an ING account (which is funded each paycheck), a… Read more »

april
april
10 years ago

I’m a natural saver and I couldn’t make myself track every penny if my life depended on it. I know approximately how much money is in my bank account at any given time, and will check it every so often to see if I’m correct. I also keep a decent size cushion of cash in that account for the just-in-case scenario. With all of that said I still enjoy using mint.com, since it provides me with instant graphs, monthly comparisons, etc. I do not think you should be worrying about falling into old habits. You enjoy having a stable, healthy… Read more »

Joe M
Joe M
10 years ago

I’ve never been successful at tracking every penny. I tried Mint and like it, but only looked at it once or twice.

I’ve always been a detailed planner about getting to financial goals. No consumer debt and mortgage debt will be retired this year. I used to charge everything to one credit card but am in the process of moving back to cash and debit cards because the large bill at the end of the month feels like it is hanging over my head.

I do try to automate as much finance as possible – both savings and bills.

Dan
Dan
10 years ago

I’ve been using Mint for a bit over a year now and it works very well for me. My wife and I use credit cards primarily, but we simply use them for ease rather than for “credit”. We use them exactly as if they were a charge/debit card, and are very conscious of how much we have in our accounts because we check Mint once or twice a week. We have set up a budget for our major expenses such as gas and groceries, and include our average monthly bills. We then can instantly see how much we’ll be saving… Read more »

Four Pillars
Four Pillars
10 years ago

Totally agree with Michiel (#5).

I used to keep a fairly tight budget although I still didn’t track every expense.

Now, I just don’t care. I save a high percentage of my earnings and I remember what I spend my money on.

ami | 40daystochange
ami | 40daystochange
10 years ago

Interesting post. I keep meaning to start using Quicken but had been putting it off. Now I think it makes sense to move away from detailed tracking. I’m starting to think that Money’s power (and its utility as a tool) lies in its ability to help you buy time. If you save more you can retire earlier. If you spend on car maintenance instead of a new car, you can use the savings to go on vacation. It seems that if you believe that money’s power lies in its ability to give you back your time – then spending a… Read more »

David
David
10 years ago

My wife and I still track every penny in Quicken, just as we have for 13 years. We are very stable financially (and otherwise): we are selling the house we have lived in the past 11 years (our first house) and moving into the house we expect to have for the next 20 years (with a 15 yr mortgage and putting almost 60% down on it). Our retirement accounts are sufficiently funded. We live well below our means and donate over 20% of our gross income annually. We have never had revolving credit card debt and owe nothing on either… Read more »

Eri
Eri
10 years ago

Like many, I too track every purchase I make (though the vast majority of my transactions are electronic), I just don’t use any complex system with detailed itemization. A simple set of Excel sheets is enough to get a quick and broad weekly/monthly/yearly picture and check for errors. It’s just like keeping a brief diary (… and in a sense it IS a diary, as how you spend your money often correlates with what you value and how you live your life). But, at the same time, I’m a saver. I’ve never been in serious debt (had an auto loan… Read more »

Moneymonk
Moneymonk
10 years ago

I don’t track my spending. I save 30% off the top and pay our bills with the rest. Whatever is left off is my guilty pleasures !!!!!!!!!

Yeah:)

Ben Robison
Ben Robison
10 years ago

The way I see it, tracking every penny you spend is so easy that I don’t see a reason not to do it. I never actually spend cash on anything, so there’s a record of every transaction written somewhere else (at the financial institution for example). Mint pulls all those records into a single place for me, so the only “effort” involved in tracking every penny is to log in and correct the automatic categorization if you need to.

TosaJen
TosaJen
10 years ago

DH and I have our weekly cash allowances that we only track as lump sums, but beyond that, we categorize everything as it is imported by Quicken from our accounts. I agree with JD, that at a certain point, it’s OK to take the tracking back to a less-intense level. Coasting, I call it. Unlike Kris and JD, however, our financial picture is always changing — we have kids who keep growing and changing and needing different stuff that can affect the financial picture. Meanwhile, we’re in financial flux while I look for my next job and we decide whether… Read more »

RMoM
RMoM
10 years ago

I MUST track my expenses and I do it daily. It’s the only thing between me and closets full of stuff again. If I can see what I’m doing with my money in full on a computer screen, it prevents me from turning a blind eye to problem spending. I also need to track expenses because I believe I still have fat to cut and an Excel visual helps me to do that. I don’t use any type of ‘prepackaged’ software program at this time because I find most of them are too elaborate. I don’t want to have to… Read more »

partgypsy
partgypsy
10 years ago

If I could get to the point where I am saving off the top 20 or 30% of spending (whatever my aim is) and able to live off the rest without tracking, then I also would not track spending other than maybe a monthly summation to make sure all the bills were paid. I still track spending because I find it interesting trying to tweak budget to get maximum safety and enjoyment from our money. Once I get to that equilibrium, would rather make a comic or work out or do multiple other things than endlessly refine ways to put… Read more »

bankelele
bankelele
10 years ago

i’ve got data of cash expenses for two years 2008 and 2009. will run the numbers and look to a meaning to see if i’ve improved my cash spending

Storch Money
Storch Money
10 years ago

This is an interesting topic. I definitely do not track every dollar of spending. I have a spending plan that adds up monthly expenses and I change it when my income or expenses change. It’s extremely high tech — I write it out by hand in a legal pad. From that plan I come up with a fixed amount, in addition to 401k withholding, that I will save every month. I make that savings payment automatic. The basic idea is that the checking account balance should stay roughly even. If it goes up or down materially, I adjust the savings… Read more »

Polly~
Polly~
10 years ago

I also agree with Luke. It’s a personality thing. I have been debt free other than my mortgage for over 3 years, yet track every penny. I’m so fascinated by the information that I can even tell you to the penny how much I have in my change jar! ($88.33 until I find my next penny) LOL

Quicken is my chosen addiction, although I also track things in Mint and on Bank of America’s online portfolio. They have limitations that are frustrating though, so Quicken is it for me.

squished18
squished18
10 years ago

JD, There seems to be a law of diminishing returns with tracking spending. I went through the same patterns as you. I used MS Money for a few years. I still track spending, but more on a macro level than a micro level. I have a monthly budget, and keep a running total of amounts spent across each budget category. That seems to keep me on track month-to-month. I think at the beginning, you get big dividends from tracking each penny because it enforces a new discipline we never had. Once we get into the habit of being conscious of… Read more »

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