Within the past couple of weeks, I took up a new personal finance habit. For the indefinite future, I’m keeping track of every single expense I incur. Whether it’s a necessity like gas for the car, a monthly phone bill, or a pop at a ball game, I’m going to document it.
I set up a really simple spreadsheet within my finance section in OneNote. In addition to the basic information about each expense, I also have a column called ’stupid’, which is pretty self-explanatory. Any expense that is just plain uncalled for gets a big old checkmark in this column; for example, my recent overdraft fee. Granted, my spending money is meant to have fun with and spend on random things- the ’stupid’ designation is more for bonehead expenses that should have been avoided altogether.
I think this will turn out to be a really worthwhile habit to stick with. I’m always considering the big picture/larger aspects of my financial life, but this will give me a better view of what’s actually going on at the ground level. I will be able to look back from time to time (I’ll keep monthly totals), and critique my spending habits.
I really believe it will make me think twice before buying anything really, knowing that it’s going to be to be documented for good. There won’t be any impulse buying where I basically push the regretful feeling out of my mind and don’t learn anything. I’m going to do everything possible to avoid those ugly checkmarks.
What do you think? Too tedious or unnecessary? Or a good way to really get in touch your spending habits?
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9 users commented in " Tracking My Expenses: "
Follow-up comment rss or Leave a TrackbackI think it’s a great idea to begin to track how you spend your money. You may change how you budget or categories you budget but overall, any time you can develop a healthy habit such as budget tracking, it can only benefit you down the road. Using a spreadsheet might be very difficult to keep organized, and you can’t visually see how you are spending your money.
I know you have checked out our site in the past, but I believe using a budgeting tool will be more beneficial to what you are trying to achieve. It also is something that your readers will value you input on and is something they might like knowing as a tip.
Craig
http://www.budgetpulse.com
Hey Craig,
If you have a chance, check out this post - http://youngdough.com/2007/10/17/a-basic-flexible-budget-that-works/
I’ve found this to be the best way that I budget my money. It’s extremely simple; takes only about 5 minutes a week, and works perfectly for me. I know I’m contradicting myself with the “tracking every penny” line, but this new project is more about getting in touch with my habits than trying to better my actual budgeting style, if that makes any sense?
Personally, I don’t think I would last a week with online budgeting software; that’s just me though. However, while I don’t think I could give a personal thumbs-up from my own satisfaction, I’d be more than happy to refer my readers to BudgetPulse. It may not fit my personal style, but I know there are plenty of people who would absolutely love what it can do for them. It may be a couple weeks, but look for a ’shout-out’ post as an appreciation for the support you’ve given me on this blog. Thanks!
-blake
Blake - This is a great habit to develop. The first step to getting your financial house in order is knowing where your money goes. I don’t think it’s as important how you track it, as long as you track it! You don’t want to make it too complicated or you won’t stick to it. If everyone followed the path you have been laying out over the last several months, we would all retire millionaires! Good Luck!
Blake, very good. This is the first step to really understanding your finances. I recommend people do this exercise for 30 days before they begin crafting a budget. I call it the 30-day challenge. You can’t control your money unless you know where it is going, otherwise it will control you. Good job and keep it up!
Thanks John for the kind words!
Aaron,
I’ve heard of many, many personal finance people recommending that people do exactly what you describe. It’s pretty darn eye-opening.
Blake,
You’re on the right track. I really believe that tracking your expenses (and even your income streams) is essential to managing your money. If you don’t know where your money is going (or coming from), how are you going to be able to make any decisions with it?
My family is still going down the road to financial independence, and this was the first (and most important) step we took. We just made a blog to share what we’ve learned in our journey, and one of the most important parts of it is a series I’m in the middle of making on the steps we took (Step 1 is up now, Step 2 comes up this weekend). Step 1 is the step you’re taking now. I put some tips on how to make it easier up there, but it sounds like you’re already in the right mindset!!! Great job, and keep up the good work. I’ll certainly be coming back to check your progress.
Thanks for the visit Matt. I’ll be over to check out your work.
-blake
Got you added to my blogroll. Definately like the site.
Thanks Matt. Got you added as well.
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