Tracking spending...

[Danmar]

Very obvious that expense tracking is a very personal thing. If it works for you great. As long as you stick to it and adapt your system to your needs you will have a valuable tool. Shouldn't be too concerned with what others do.

 

[shortstop14]

I feel like a slacker now <laugh>. All I do is record the monthly cashflow out of the checking account every month, then go through the charge card statement and identify special one-time expenses and travel expenses. So I've got average monthly and annual spending, average monthly and annual travel expenses, and monthly and annual average expenses minus special and travel. Right now that goes back five years, tracked in a spreadsheet.

As long as we keep the annual total expenses down around 3.5% of the retirement date assets, I don't worry about where to cut. We're genetically pretty frugal, and during bad years we'll just cut back on travel. Hasn't been an issue yet in three years of retirement, fortunately - so far sequence of returns has been on our side.

I'm afraid if I tell my wife to cut down on the granular expenses like organic food, she'd start questioning the wisdom of retiring early.

 

[audreyh1]

I have some very broad budget categories. I have an amount budgeted for basic living expenses, and then an additional amount that covers charity/gifting, and special expenses (like a new computer) and "extra" travel, i.e. all the discretionary expenses. As long as I am generally on track throughout the year in each broad category I don't worry about how much is spent on groceries versus fuel, etc.

But I like to have my expense reporting broken down in finer detail. I do like to see what I am spending on per month on say groceries, or eating out, or utilities, etc., and compare year-to-year.

 

[Ronstar]

I used quicken until maybe 2005, switched to my own spreadsheet for 10 years, and now back on Quicken at the beginning of 2015. I only have about 8 expense categories that I track, and they're categorized automatically through downloads of checking and credit card data. I try to minimize cash expenses, which I normally categorize as misc or dining. I analyze expenses in detail maybe once every 6 months. In the interim, I know I'm on track if I keep monthly atm withdrawals below $600 and monthly credit card bills below $3k.


Sent from my iPad using Early Retirement Forum

 

[NW-Bound]

I only started to track expenses with Quicken since 2010. My wife had been doing her thing with Excel for years, and she continues to do that, as she pays all the bills. I, on the other hand, take care of putting money into the checking account and manage the investment accounts.

Prior to using Quicken, I use MS Money for investment tracking. Now, the additional expense tracking requires very little additional work. Our expenses are extremely lumpy, just from the past 5 year data. One year, the biggest item was purchase of the RV and toad. The next year, it was gift to my daughter. The year following that, it was a major home repair. I can look back and see where my money went. It's great.

 

[turbo89]

I just downloaded "GnuCash" to start tracking my expense in more detail... It seems like a powerful tool, I just need to work through the nuances in dealing with brokerage account holdings.

I was previously utilizing an excel spreadsheet and was considering Quicken until I read some of the reviews on 2014 / 2015 versions.

If someone here is looking for some software definitely checkout GnuCash; It's free, so it won't cost anything to give it a whirl (except some of your time).

 

[Options]

...

Do you people actually go line-by-line on the cash register receipt and categorize each purchase?

...
-ERD50

I don't dare break out how much I spend weekly, monthly, or annually on the very last of my many former vices (back in the day when I was fun): my regular decaf cafe mocha. Sitting out alone at my favorite outdoor cafe leisurely watching the morning begin is one of my favorite retirement activities.

I have some very broad budget categories. I have an amount budgeted for basic living expenses...But I like to have my expense reporting broken down in finer detail. I do like to see what I am spending on per month on say groceries, or eating out, or utilities, etc., and compare year-to-year.

Me too. I've used an excel spreadsheet for decades that gives me an idea of what I'm spending in different categories by month and year. My annual budget is based on that spreadsheet and all spending targets being on budget. Frugal as I am, I'm usually always on budget.

 

[big-papa]

I still don't understand how CC statement and bank statements gets one down to the granularity to see where the money is going and make decisions.

We spend a lot at Costco, and grocery stores for example. But that doesn't tell me much of anything useful. Everything from toilet paper and water softener salt is bunched in with discretionary items.

Do you people actually go line-by-line on the cash register receipt and categorize each purchase? And how do you identify things like buying a high grade of something versus a lower grade? If I wanted to further economize, I might learn that buying lower grades of bacon, hamburger versus steak, etc, might save me $X per month. But that would seem to take a lot of figuring, a lot of judgement, a lot of categories. What does entering a prime steak as "grocery" versus entering hamburger as "grocery" tell me - they just both come up as "grocery"? But there is a savings there if I want to pursue it, but how would I see it?

I know what my total spending is (it only comes from two accounts, I just add up the withdraws, and add back any reimbursements or 'transfers' (like moving money from savings to fund a Roth IRA contribution). But I really don't know the detailed breakdown - after utilities, mortgage, insurance, property tax, etc - the big hitters. We try to be careful with our purchases, looking for value. I'm not sure what I'd gain with a bunch of penny-level numbers - what would they really mean to me? What action could I take based on them?


-ERD50

I generally enter receipts on a receipt-by-receipt basis and not on an item-by-item basis in the receipt. For example, most of my spending at Costco goes in to the 'grocery' category because that's what most of my expenditures are there. And we consider TP and water softener salt as grocery items. If in the $200 receipt (is it ever less than $200 at Costco? ) there's a large item that screams "discretionary" or "home improvement" or "clothing" because the amount is large enough to notice, then I'll pull that out and put it in the proper column. Won't even bother with its sales tax contribution. We're not talking about that level of accuracy here - it's just not that necessary for us.

For the bills that just aren't the same every month (like Groceries, entertainment, electricity), yeah, I want to know where it went because then I can spot a trend if something is out of whack like a water leak causing the water bill to trend upwards, for example. The other thing it does is at the end of the year, I can check total expenses in each category and then either adjust the budget for them going forward (personal rate of inflation) or find ways to reduce expenses.

The spreadsheet I have probably has 20 columns: each utility has its own, groceries and restaurants are separate, there's clothing, medical expenses, each type of insurance, homeowner's association, property tax, Amazon Prime, netflix, etc.

I also have a spreadsheet with a scattergram that shows kilowatt-hrs of electricity used per month vs. the average daily temperature in Austin. Dropped 500kw-h off per month on average after adjusting the thermostat (small change) and changing the number of hours the pool pump runs (biggest change) Can you tell I'm an engineer?

Do I need to do even this much? Probably not. But I also enjoy it.

Big-Papa

 

[big-papa]

When we first retired, I set up a budget spreadsheet. Then when we looked at the actuals, we laughed. What were we thinking with that budget?

But we do maintain a handle on total spending, especially for extraordinary items. We also eliminated all excess spending in the first year of retirement: extra credit cards, charges from telcos and cable cos, use of electricity, etc. And our total spend is well below 4%.

And we often walk to places that we would have driven to when we worked. It is amazing how far you can walk and just enjoy the experience, even developing alternate routes just to explore.

And, of course, we take advantage of seniors' discounts, like shopping on Tuesday, eating at 5:30. In Mexico, comida is served from 2-4 in the pm, so we arrive at 4 for our first and main meal of the day, eating a light breakfast and dinner at home when it is convenient.

There is also Groupon for even more savings. To us, managing the spend line is more important than tracking. That is what got us minimizing telco/cable expenses initially.

Very cool. We're not retired yet, but I got to practice for it for about 10 months between jobs. First thing I did was download all checking account data and credit card data for the previous 2 years to see where everything went. Before that, we were pretty much playing it by ear - we saved a certain amount every year from the paycheck and all bonuses just went straight to savings without a thought. Just looking at the credit card balance just before paying gave me an idea whether we had spent more than we usually did (we pay most things on the card and pay it off every month).

But the data download was indeed an eye opener. Now that it "mattered", I was able to drill down and see where the money was going and identified pretty quickly some areas to cut down on. Granted, many of them were things that were always in the back of my mind, but now I had real numbers and real time to pursue them. Things like adjusting our homeowners insurance, dropping cable, dropped the health club (bike instead), refinancing the house (after I went back to work), adjusting our car insurance, analyzing and modifying the pool pump schedule, adding low-flow shower heads, LED lights, identifying hotspots where insulation was weak in the attic, dropping housecleaners, dropping mowing service and reducing restaurant expenses.

I've been back to work now for over a year and with the exception of slightly increasing our restaurant expenses, we've kept our expenses pretty much where they were during the time I was between jobs. Net result is that even though my current job pays a little less than my previous one, we're now saving significantly more than we were before.

Big-Papa

 

[Willers]

I enter all receipts manually into Quicken, and split costs into appropriate cost centers when needed. It's more work but it is also more accurate.

But to each his or her method.

Same here. I've found it to be the best way to ensure that the categories are how I want them. I only do splits when the numbers are significant. I could load them electronically and then adjust categories, but that seemed harder to me.

Manual entry also prompt notes. This really helps when we look back to see what we've spent in the past on something.

Works for us. YMMV.

 

[Independent]

I always think about this story:

IIRC, many years ago Consumer Reports wanted to do some research on budgeting/tracking. So they asked their readers to write in and describe the methods they used. I think the CR editors thought they would see a pattern and they could develop some "standard good practice" recommendation.

They had a lot of submissions. People sent in spreadsheets (paper and pencil in those days), detailed category assignments, tracking methods, etc. They were obviously proud of the methods they used and were happy to share their insights.

The problem for the CR editors was that no two were the same. They didn't concentrate around one best practice, but spread out over a whole range of possibilities. i think their project ended there.

 

[Cat-tirement]

Do you people actually go line-by-line on the cash register receipt and categorize each purchase?

Yes, at least since UPCs became common, which corresponded with brief item descriptions being added to the receipts.

 

[jjquantz]

I also have a spreadsheet with a scattergram that shows kilowatt-hrs of electricity used per month vs. the average daily temperature in Austin. Dropped 500kw-h off per month on average after adjusting the thermostat (small change) and changing the number of hours the pool pump runs (biggest change) Can you tell I'm an engineer?

Do I need to do even this much? Probably not. But I also enjoy it.

Big-Papa

Thank God I'm not the only one! My wife thinks I'm crazy, but I do the same thing for both gas and electricity. I find it fascinating and it was amazing the drop in usage when we replaced the previous owner's incandescent floods with CFLs and LEDs. I'm eagerly awaiting the first month's returns with the new AC, the first 10 days looks promising.

 

[NW-Bound]

I also have a spreadsheet with a scattergram that shows kilowatt-hrs of electricity used per month vs. the average daily temperature in Austin. Dropped 500kw-h off per month on average after adjusting the thermostat (small change) and changing the number of hours the pool pump runs (biggest change) Can you tell I'm an engineer?

I can make plots like this (see screenshot) by logging on to my utility Web site.

And I can, and have, downloaded the same data in a spreadsheet format, but have not made the scattergram yet. No data entry required for me.

 

[SteveNU]

I just have a spreadsheet to track the outflows from my accounts that pay the bills for a big picture number. I track it by 3, 6, 12, 24, & 36 month averages to see the trends. I think I got the idea from the retire early lifestyle website. But before I did this I tracked expenses with more detail so I have a pretty good handle on where I spend my money. I've tried to use quicken many times but never was able to stick with it long term.

 

[ABQ2015]

I save my receipts and write down expenditures in a bound notebook using about 10 categories (Utilities, Food, Car, Cats, etc.) - write the date, store, amount, and what I purchased e.g., cat food, gas, oil change. I stopped listing individualized groceries. Groceries will the last item that I ever try to cut costs on. Then I add the costs up quarterly and annually. Low tech but it works for me.

 

[jjquantz]

I can make plots like this (see screenshot) by logging on to my utility Web site.

And I can, and have, downloaded the same data in a spreadsheet format, but have not made the scattergram yet. No data entry required for me.

Wow, you are fortunate. One of my utilities provides a 12 month lookback graph of usage vs temperature on the bill (it measures perhaps 1 inch high by 1.5 inches on the paper bill) but the temperature resolution is so poor as to be useless and there is no capability to download the data. The other utility provides nothing.

 

[NW-Bound]

Yes, my utility company, the Salt River Project, which they say is "the oldest multipurpose federal reclamation project in the United States" (since 1903) turns out to be quite progressive, and does good work with the data that they collect automatically from smart meters.

The home owner can dive down to see hourly power consumption for each day, as I have shown elsewhere on another thread. See: http://www.early-retirement.org/forums/f28/a-small-economy-77430-6.html#post1603492.

They keep data going back 3 years. It's good enough for me to see the savings from the variable-speed pool pump, as I described earlier. Right now, same as you with your new AC, I am waiting to see the electric savings from my fancy schmancy dual-pane argon-filled windows that were installed three months ago (perhaps $20/month).

 

[audreyh1]

Thank God I'm not the only one! My wife thinks I'm crazy, but I do the same thing for both gas and electricity. I find it fascinating and it was amazing the drop in usage when we replaced the previous owner's incandescent floods with CFLs and LEDs. I'm eagerly awaiting the first month's returns with the new AC, the first 10 days looks promising.

My energy provider does this for me and emails the month trends.

 

[523HRR]

Like others I have tracked spending in detail in Quicken for many many years. Just a natural reflex now. It helps me stay reconciled with bank accounts and credit card balances. Tracking all dividends and reinvestments at the security level provides instant updates for cost basis of all positions. All of this culminates in our total household net worth easily monitored over time.

 

[big-papa]

I can make plots like this (see screenshot) by logging on to my utility Web site.

And I can, and have, downloaded the same data in a spreadsheet format, but have not made the scattergram yet. No data entry required for me.

Pretty cool - my utility only has 1 month granularity but the whole thing can be downloaded into a spreadsheet and then a scattergram created. My plot is an interesting V shape with increasing kw-hr vs. temperature during the summer months as you would expect due to increase A/C usage vs. temperature. But below a certain temperature, it rises again as it gets colder but at a much slower increase than the summer months. I have a gas furnace, so that's not it and I'm pretty sure it's not the fan that kicks on when the furnace kicks in. Best guess is that it's the pool pump automatically coming on when temperature gets within a few degrees of freezing.

 

[big-papa]

Thank God I'm not the only one! My wife thinks I'm crazy, but I do the same thing for both gas and electricity. I find it fascinating and it was amazing the drop in usage when we replaced the previous owner's incandescent floods with CFLs and LEDs. I'm eagerly awaiting the first month's returns with the new AC, the first 10 days looks promising.

We had already replaced the major-use interior bulbs with LEDs sometime ago. But I'm still replacing all others as they expire, with one exception. We have a post lamp by the driveway with an electric eye. Since it's on every night, it was a top contender for replacement. Because I was doing a shotgun approach to energy savings, I had to calculate this one instead of measuring it, but it worked out to about $5 per month - enough to pay for itself in a few short months.

Likewise when I saw that our water usage was steadily increasing as my daughter steadily increased in age. Doing some research and swapping out to low flow shower heads stabilized that one. Well, it did until a sprinkler valve decided to leak. But that's fixed too now.

 

[burkey]

Tracking Spending

I guess there are many apps/websites out there which automatically track your credit card spending and categorize. I tried one, didn't like it, and also didn't feel comfortable with the feeling it wasn't very secure. For the past 2 years since I retired, I am using Pear Budget. I spend 5-10 minutes every morning, inputting what we spent the day before. It has proven so far to be a useful tool for me.

 

[Evie]

I have used Mint for about 4 years, but I hate the "budgeting" tool. It's too hard to figure out what is going on. I just downloaded You Need A Budget a few days ago and I'm trying the trial period to see how I like it. So far, I like the look of it way better than Mint.


As for Costco, I break out Shopping (TP, paper towels, random home stuff) purchases separately from Groceries. Anything I can't eat or drink goes into Shopping typically. To make it easier on myself, I will often put everything that isn't food first on the conveyor belt when I'm checking out and ask them to give me a subtotal on my receipt before they ring up the food. That way I can easily just record the split in the categories.


We sometimes will buy gift cards there and those I budget out to what they are for... like if we buy California Pizza Kitchen gift cards, I'll code that to Restaurants.

 

[redduck]

For a number of years now, I've been telling myself I need to accurately track my spending. But, since no one listens to me, I decided I wouldn't listen to me either. However, what I have done this year (mainly out of guilt and shame) was to sort of acknowledge my cash outflow. So, what I am doing is not too difficult (and maybe not too helpful). Using monthly bank statements, I added up "checks and other withdrawals" for the first six months of the year. That took about 5 minutes (most of the time was spent refolding and then putting the statements back into their envelopes). As for cash expenditures: I usually forget to write them down and in any case, I don't write anything down that's less then twenty dollars. But I did total up what I had bothered to write down and multiplied by two. The curious thing about this system is that I have no idea how well it works for budgeting. This is still a work in progress, and I imagine that I will be able to streamline it as time goes on.