Couch Potato Budgeting and Expense Tracking

[kcowan]

I call everything at Costco, grocery stores, liquor stores, Etc CASH. I should probably break out the wine, beer, and liquor, but that would be embarrassing.

Yes. Tires, clothes, drugs, liquor, furniture, appliances and a bit of food. Sure glad I no longer have to budget by line item.

 

[Danmar]

That's a good point. It seems more of an exercise for information than something that is actually needed in such precision. I am in the non-specific budgeting. I just keep an eye on the total as needed. I don't worry about what I am spending on, just that at the end of the month I am staying within expected amount. I guess that is a nice perk of being in a financial situation where I do not have to watch every penny or purchase. It's not like I have to choose between a good microbrew beer and mass produced - I can have both!

I like to be in total control of our finances. It’s certainly not because we are tight or short of funds. I want to know how much I have in my cash accounts next summer, after I pay for lumpy expenses like the new boat, sea-dos, renovate the bedroom, go on two expensive trips, and gift my daughter enough for a down payment on a house. Also, our dividends are fairly lumpy with some months being much more than others. Our finances can be pretty complicated so forecasting out a year or two gives me confidence and a sense of control.

However, I can certainly see how many others would be just fine doing it your way. Everybody is different.

 

[audreyh1]

Our expense tracking was all set up well before we retired. And back then saving etc., we were much more careful about our spending and our budget was more carefully crafted.

What we have today is easy because it was already set up. And the budget is a very loose well-padded budget. I really only care what we are spending on our on personal day to day "living expenses" which is most of it, travel expenses, charity and gifts, and "special expenses" that include infrequent items such as buying computers. There is way more detail if I want, but I rarely do more than glance at the specifics.

Income taxes are tracked separately as I do not budget for them in my spending budget as they are not something we can control and vary wildly. I can see reports any time I want. I do set aside funds for paying anticipated and estimated taxes from our withdrawal each year. The rest of the money is available for spending.

 

[W2R]

I like to be in total control of our finances. It’s certainly not because we are tight or short of funds. I want to know how much I have in my cash accounts next summer, after I pay for the new boat, sea-dos, renovate the bedroom, go on two expensive trips, and gift my daughter enough for a down payment of a house. Our finances can be pretty complicated so forecasting out a year or two gives me
confidence and a sense of control.

I can certainly see how others would be just fine doing it your way. Everybody is different.

+1, and well said!

Knowledge is power and I want to be fully aware of what I spend since my spending is something I really do control. It has nothing to do with being worried about spending too much - - I could probably spend twice what I do, and be just fine. I just want to know how much I spend on what, and exactly how much flexibility I have. With this level of knowledge and control, I can do things that I do not normally plan for or do on an every day basis such as buying my dream home in cash instantly.

A lesser reason why tracking my spending in detail is appealing to me, is to know for sure that I would be fine in the next market crash. It's part of my planning. If you don't know and control what you spend money on, you really don't know exactly how much you could cut back in the event of unforeseen disasters.

 

[ERD50]

I still don’t get the point of writing down each and every month your expenses. ... Do you look at these spreadsheets and say...”honey, looks like you got an extra tank of gasoline this month...better quit driving so much....or the grocery costs were $13.43 more this month than last month, let’s skip a few meals next month to even that out.

Do you do it for fun? I just don’t see the point.

+1 - I just don't see the value. Of course, anyone can do it if they "want to", but I don't see any reason to do it.

... Now that I have done it for almost 2 years, I have learned my spending in certain categories is not what I thought it would be or was. ...

So what actionable item comes from that? That's what I don't get. I may know something, but if it doesn't drive an action, what's the point?

... As for the effort:
I don't get all OCD about it, so for example, when buying stuff at a grocery store, it's all groceries, even if a bottle of wine is in there. Because the inaccuracy is very small.
If I'm at Sam's and buy groceries and some big thing, I just subtract out the cost of the thing from the groceries.

But if you don't separate out grocery items, food, versus toilet paper, versus whatever - what's the point anyhow?

-ERD50

 

[zinger1457]

I keep a speadsheet of estimated expenses for the year and maybe update it 2-3 times a year, I use a pretty good fudge factor for my non-fixed expenses. I have no interest in tracking down to the penny what I've purchased, just look over my CC charges maybe once a week to make sure all charges are legit. I have 1/12 of my estimated yearly expenses automatically deposited into my checking account every month so it's easy enough to take a quick glance at my account balance to see how I'm doing. My bank sends me an alert if my checking account balance dips below a certain amount so I can make adjustments if needed.

 

[kcowan]

I like to be in total control of our finances. It’s certainly not because we are tight or short of funds. I want to know how much I have in my cash accounts next summer, after I pay for lumpy expenses like the new boat, sea-dos, renovate the bedroom, go on two expensive trips, and gift my daughter enough for a down payment on a house. Also, our dividends are fairly lumpy with some months being much more than others. Our finances can be pretty complicated so forecasting out a year or two gives me confidence and a sense of control.

However, I can certainly see how many others would be just fine doing it your way. Everybody is different.

Yes I agree. I am comfortable looking at my spreadsheet for the next several years that provides an allowance for major purchases. It also includes a forecast for portfolio returns, so if that varies, I can adapt. As I have mentioned before, I do not need to adapt. But I still like to know the impacts.

 

[PatrickA5]

I've been tracking expenses for years. Around 20 categories. I kind of like doing it in a weird sort of way, but as others have pointed out, it's more for knowledge purposes rather than doing something actionable. I rarely stop spending on a category just because it's high or over budget. Probably the best thing about it is I have a very good idea of what our expenses are heading into retirement. I know exactly where I could save money if I wanted to. I also have a very good idea of how much in expenses will disappear after my DS is out of college and on his own. Once we're fully into retirement (i.e. DW retires), I'll probably just load up my accounts with a years worth of funds and quit keeping track.

 

[Sue J]

I still don’t get the point of writing down each and every month your expenses. Unless, you are in such financial dire straits that you have to watch every single penny because you might not have enough money to cover it.



I know close enough what my expenses will be....real estate taxes, homeowners insurance, auto insurance, cable/internet. I know roughly how much we spend on groceries, gasoline, and utilities. Sure, things come up unexpectedly.....but, so what. Do you look at these spreadsheets and say...”honey, looks like you got an extra tank of gasoline this month...better quit driving so much....or the grocery costs were $13.43 more this month than last month, let’s skip a few meals next month to even that out.



Do you do it for fun? I just don’t see the point.

Yes, I do it for fun! I used to be an accountant before I quit in 1984 to have a family. I never missed working full time in an office but I do miss the accounting. Our family finances are super simple but I have fun making spreadsheets. I enjoy keeping track of our income and outgo. Our monthly budget is very generous and flexible.

I keep track and wrap up every month because it makes it concrete for DH. Since he retired I’ve tried to get him involved in our finances. Having totals at the end of the month means he can nod and smile and act like it means something to him. Actually, if there is cash in his pocket and food in the house he doesn’t care about the rest of it.

So, I do it for me, because it’s just fun.

 

[audreyh1]

Knowledge is power.

 

[48Fire]

When we were in the savings and accumulating phase, I tracked expenses in Quicken. It was mostly useful for times when my wife wanted to buy something discretionary. I could say why we couldn't afford it. Now, we can, so what's the point? Just seems like a time-waster.

 

[ERD50]

Knowledge is power.

But only if that knowledge leads to something actionable. Otherwise, it may be satisfying, it may be "fun", but I don't see any power to it if it goes nowhere.

A similar axiom that we pretty much lived by in my line of work was "if you don't measure it, you can't improve it". But again, if you get the measurements, but don't have a meaningful response, you won't improve it anyhow.

So if I find I spent $xx.xx on gasoline last month, and that is 10% more than average (per day, accounting for different days/month), what do I do with that knowledge? If I'm thinking about minimizing trips and watching my driving to be fuel efficient, maybe I needed to drive 10% more miles that month, or more stop/go driving, reducing average mpg. So what?

-ERD50

 

[RunningBum]

But only if that knowledge leads to something actionable. Otherwise, it may be satisfying, it may be "fun", but I don't see any power to it if it goes nowhere.

A similar axiom that we pretty much lived by in my line of work was "if you don't measure it, you can't improve it". But again, if you get the measurements, but don't have a meaningful response, you won't improve it anyhow.

So if I find I spent $xx.xx on gasoline last month, and that is 10% more than average (per day, accounting for different days/month), what do I do with that knowledge? If I'm thinking about minimizing trips and watching my driving to be fuel efficient, maybe I needed to drive 10% more miles that month, or more stop/go driving, reducing average mpg. So what?

-ERD50

Maybe you see from your gasoline spending what the impact of buying a higher mpg car, or an electric, would do for you overall. That's a major decision you can make with budget information. (Yeah, you could probably do this simply from looking at your odometer and local gas prices but it's an example.)

Budgeting isn't just a matter of seeing what you are spending and cutting back if you go over. There's plenty of other actions you can take. If my grocery bill is way over due to buying nice food, but my dining budget is way under, maybe I eat out more, if I'd like to. Or maybe I just recognize that I enjoy eating nice food at home just as much as going out, so I just adjust my budget. The latter isn't really an action, but maybe it makes me feel better about getting prime cuts because I've proven I'm really not spending more in the food part of my budget, something I wouldn't discern from looking at a single total. There's value in that too.

I choose not to itemize budgeting, but I still see value in it.

 

[ERD50]

Maybe you see from your gasoline spending what the impact of buying a higher mpg car, or an electric, would do for you overall. That's a major decision you can make with budget information. (Yeah, you could probably do this simply from looking at your odometer and local gas prices but it's an example.)....

Right, and all the examples I can think of are more effectively dealt with directly.

... If my grocery bill is way over due to buying nice food, but my dining budget is way under, maybe I eat out more, if I'd like to. Or maybe I just recognize that I enjoy eating nice food at home just as much as going out, so I just adjust my budget. ...

Right again. I know a meal at a restaurant is far more expensive than dining at home, I know prime rib-eye steaks are more expensive than ground beef. And I make that value decision at each purchase, not at the end of the month when I compare line items.

And that assumes I've taken the time to separate out the steak from the water softener salt from the toilet paper (I buy that and more at Costco - one receipt). And maybe this time I decided to pay for a group at a restaurant for a favor they did for me - am I going to have some crazy accounting for that?

I really don't see how any value can come from this. I think people are kidding themselves to say there is value to it (though they are certainly free to do it if it feels good - just don't try to 'sell' me on it having value, unless you can back it up).

-ERD50

 

[RunningBum]

I really don't see how any value can come from this. I think people are kidding themselves to say there is value to it (though they are certainly free to do it if it feels good - just don't try to 'sell' me on it having value, unless you can back it up).

-ERD50

I'm not going to spend too much more time on this, but I suspect it doesn't have so much value to you because you don't have to be too concerned about your budget. For someone on a tighter budget, I think it becomes more important. I also think it is important for someone approaching retirement, because it helps them determine which expenses will stay in retirement and which will go away, and also help them see what a "bare bones" budget would be. All this helps determine when you can retire, because how much you spend is as important as how much you have.

In any case, if it's not of use to you, don't do it. Nobody is trying to sell you on anything. They are doing it for themselves. It's their business, not yours. Who cares if you don't see the point? (Not targeted at you solely but also at others who have made that comment.)

 

[PatrickA5]

- just don't try to 'sell' me on it having value, unless you can back it up).

-ERD50

I really don't think anybody is trying to "sell" you anything. If you don't see the value, fine. Doesn't mean there isn't value to others.

 

[ABQ2015]

Tracking expenses allows me to see where it would be most advantageous and easiest to cut costs if needed and those categories may not be the ones you think they are. I was spending several thousand a year on my old pets, particularly vet bills, more than several other categories combined. I wasn’t going to get rid of them but now that they have crossed Rainbow Bridge, I’m taking a break from pet ownership. Common sense tells you that older homes are more expensive to maintain but tracking expenses allows you to better quantify that cost. Although I prefer older homes, I’m tired of the costly repairs and maintenance and hope my spreadsheets motivate me to buy a newer smaller home once I downsize in retirement.

I track as I spend but I look at annual expenses, not monthly, and I don’t put myself on a budget because so far I’m spending within my income. Once I start traveling that could change so I’ll keep closer tabs. I had planned to retire in 2015 but based on a review of my expenses I wanted more contingency and decided to work an extra two years. I could have managed to retire by cutting back on my spending but was not willing to make the sacrifice – reviewing my expense spreadsheets helped me make that decision.

 

[NW-Bound]

I am like Audrey and use Quicken to download and automate the classification of as many of the expenses as possible.

I only look at the expenses after the fact to see what I spent money on. Because my spending has been really lumpy, I may spend $15K one year on my main home, then $20K on the 2nd home the next, etc... I want to be able to look back and see where the money went for any year.

I have not had to budget since I ever started working full-time nearly 40 years ago. I do need to be concerned with lifestyle creep. That's easy to do when you have plenty of discretionary spending and forget that you have splurged too much too soon.

 

[NW-Bound]

One side benefit of having everything on record is that if I need to find out how long ago I paid to have my home painted or my car repaired, I can pull up the expense category, scroll down the list and find it.

 

[ERD50]

... I also think it is important for someone approaching retirement, because it helps them determine which expenses will stay in retirement and which will go away, and also help them see what a "bare bones" budget would be. All this helps determine when you can retire, because how much you spend is as important as how much you have. ...

OK, that part makes sense to me, to make a better estimate of post retirement expenses And yes, I'm not in that mode, so it doesn't matter to me, which is probably why I didn't consider it.

That said, it doesn't seem like that is the reason for most of the people who do it here?

... In any case, if it's not of use to you, don't do it. Nobody is trying to sell you on anything. They are doing it for themselves. It's their business, not yours. Who cares if you don't see the point? (Not targeted at you solely but also at others who have made that comment.)

I care. Why? Because I try to understand other people. Sometimes I miss something, and I learn when other people explain what they get from something (not just that they do it).

-ERD50

 

[RunningBum]

I care. Why? Because I try to understand other people. Sometimes I miss something, and I learn when other people explain what they get from something (not just that they do it).

-ERD50

OK. But you didn't just say you didn't understand. You said

I think people are kidding themselves to say there is value to it ... just don't try to 'sell' me on it having value, unless you can back it up

That's seems insulting and confrontational, which often leads to less than productive discussions.

 

[audreyh1]

But only if that knowledge leads to something actionable. Otherwise, it may be satisfying, it may be "fun", but I don't see any power to it if it goes nowhere.

A similar axiom that we pretty much lived by in my line of work was "if you don't measure it, you can't improve it". But again, if you get the measurements, but don't have a meaningful response, you won't improve it anyhow.

So if I find I spent $xx.xx on gasoline last month, and that is 10% more than average (per day, accounting for different days/month), what do I do with that knowledge? If I'm thinking about minimizing trips and watching my driving to be fuel efficient, maybe I needed to drive 10% more miles that month, or more stop/go driving, reducing average mpg. So what?

-ERD50

You can’t predict what will be actionable. If you don’t gather at least some data and review it you are ignorant. Experience with gathering and reviewing data can also help you make the judgement call about how precise you want to be and where and how often you want to review.

There is no way I could have been able to estimate our future retirement spending without plenty of data from current and past spending and that part of planning for early retirement was critical. Looking at past history after retirement I can see our personal rate of inflation, how our spending patterns vary. This gives me a clearer idea of how things might unfold in the future. I adjust our budget as I review past spending patterns and I have an excellent grasp of what is discretionary and what is not and how I might need to adjust if necessary. I can feel more confident in going ahead with increasing spending in the immediate future or pull back if warranted. There are a lot of trends that don’t become evident until I review the data.

 

[Danmar]

You can’t predict what will be actionable. If you don’t gather at least some data and review it you are ignorant. Experience with gathering and reviewing data can also help you make the judgement call about how precise you want to be and where and how often you want to review.

There is no way I could have been able to estimate our future retirement spending without plenty of data from current and past spending and that part of planning for early retirement was critical. Looking at past history after retirement I can see our personal rate of inflation, how our spending patterns vary. This gives me a clearer idea of how things might unfold in the future. I adjust our budget as I review past spending patterns and I have an excellent grasp of what is discretionary and what is not and how I might need to adjust if necessary. I can feel more confident in going ahead with increasing spending in the immediate future or pull back if warranted. There are a lot of trends that don’t become evident until I review the data.

Agree. I would be absolutely lost without my “budget”. I like to think I have been pretty successful from a financial perspective and I’m not sure I would have been without my “budgie” as I sometimes call it. Both of us being accountants might be the cause of this? Anyway, makes no difference to me what others do and I am sure that many can easily get by with much simpler approaches.

 

[48Fire]

One side benefit of having everything on record is that if I need to find out how long ago I paid to have my home painted or my car repaired, I can pull up the expense category, scroll down the list and find it.

I do miss that ability, but not enough to motivate the tracking. Part of my problem was that when I loaded Quicken onto my laptop, the fonts and view is too small to be legible. Not sure if it is Quicken or Lenovo problem, but I got tired of trying to fix it

 

[48Fire]

I am all for tracking expenses before retirement, or periodically if some large lifestyle changes are pending. I had a "bare bones" retirement expense budget, when layoffs were hitting adjacent cubicles and "good people" were getting the ax for no apparent reason. I called it my "what if I retire at 48" expenses spreadsheet, and it was the motivation behind my "48fire" name. It just always reminded my of that vision.

I tracked dining and grocery expenses, and was able to show that our garden saved us $800. Although eating asparagus 3 meals a day for 6 weeks has other side affects

So I am all in with tracking expenses if they drive towards a goals.

However, we recently took a trip to New Orleans and paid for Daughter and Son-In-Law. I have no idea what it cost, but I could probably estimate it fairly quickly. We had a couple blow-out dinners, and the hotel rooms were $300 per night.

OTOH, we were vacationing with BIL and SIL and other family members. BIL tells me one morning that his "budget" for breakfast is $40. Now keep in mind that they are way more well off than us, and spend high end on everything, vacation in France for a month at a time, etc. etc. So I am thinking, huh? So are you going to tell your wife, "No honey, you can't have that, it's beyond my budget. Or, "ok honey, but you need to cut back at lunch."