Tracking spending...

[prose3589]

Just want to thank this group. Been a lurker and now an occasional poster. I review the forum daily.

The biggest accomplishment I have made is tracking my spending. I am self employed and my income fluctuates. I run a number of legitimate expenses through my business and I have used software to track that but I never kept track of my personal spending. Mainly because I was trying to create a budget.

I had a lightbulb moment here and decided to just track spending instead of income and no definitive budget. One year later... I have tracked every penny. (Eye opener)

Much more to learn...but I am proud of the past year accomplishment. Thanks to all!


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[audreyh1]

It's hard to create a budget when you don't know where the money is going. Congrats!

 

[Koolau]

I did this a couple of years ago. It WAS eye opening. I had a pretty good idea of how much we were spending, in total, because I could compare to where we started and how much income we had. The difference is what we spent. But, I guessed wrong on several of the specifics. Nothing like accounting for every penny to refocus your spending. Good luck and YMMV.

 

[truenorth418]

I budget each year and track spending to the dollar as I go, and I review/update about once per month to make sure I'm on track. Careful tracking was one of my key tools in achieving financial independence.

Interesting, when other people ask me how I retired early, I tell them it all started with tracking my spending, and they almost always say something like "Ugh, that sounds like too much work, I could never do that." Incredible that so many people think it is such a weird concept.


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[bbbamI]

IMO, it has many benefits. I'm not the 'bad cop' when it comes to spending. I just show DH the spreadsheet. Also, I see where money is going that will end in the future. I'm so used to tracking expenses, it's become quite the habit with me.

Knowing what we could eliminate if the economy goes south is a bit comforting.

Congrats on your diligence.

 

[Tailgate]

I'm sure everyone has their own tracking method... I use 'You Need A Budget' and it has been awesome for me.. good reports, mobile app, easy peasy to use... and, like you, personal expense tracking has been a real eye opener....

 

[athena53]

It's weird but I track our expenses more closely now than pre-retirement. I did have a pre-retirement budget; every paycheck I figured out what we needed to live on and invested the rest. Now I download all our credit card transactions (we do so little with cash it's not worth tracking), add any payments out of the checking account, and then key in my own category for each item. Mostly I want to know what we're spending in "necessity" categories such as groceries, housing and gasoline and what we're spending in luxury categories (entertainment, restaurants, big-ticket travel) so if we have a bad year with the investments I'll know where to cut back and what that effect will be. This year has been an expensive one with a trip to Iceland planned for next month and a lot of moving and new house expenses; it's reassuring to see that our basic living expenses are pretty low.

 

[prose3589]

I have tried to track for years but something just clicked. I had a pretty good idea what I was spending but there were a couple of categories that surprised me. I spent much more on clothing and gifts then I ever realized.

This exercise has helped me be more aware. I expect to continue doing this in the future. I use a free and very simple app. I believe it is called spending tracker. Nothing fancy. But served a useful purpose.


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[Meadbh]

It's weird but I track our expenses more closely now than pre-retirement. I did have a pre-retirement budget; every paycheck I figured out what we needed to live on and invested the rest. Now I download all our credit card transactions (we do so little with cash it's not worth tracking), add any payments out of the checking account, and then key in my own category for each item. Mostly I want to know what we're spending in "necessity" categories such as groceries, housing and gasoline and what we're spending in luxury categories (entertainment, restaurants, big-ticket travel) so if we have a bad year with the investments I'll know where to cut back and what that effect will be. This year has been an expensive one with a trip to Iceland planned for next month and a lot of moving and new house expenses; it's reassuring to see that our basic living expenses are pretty low.

Except for the bolded text, that describes me.

 

[audreyh1]

I use Quicken to show me my YTD spending by category. Transactions are assigned a category when entered or downloaded, much of the category entry is automatic.

 

[Katiek]

I've been tracking my expenses this year as one of the big steps in determining how much I need to FIRE and even though I do it in a very low tech way, it's still very informative.

 

[Sunset]

I'm beginning to think I need to track our spending, as otherwise I won't be able to convince DW that we need to spend MORE

While I can easily grab my yearly spending from the bank as I pay all my bills and CC's and take all my spending cash from the bank, it does not break down by category.

 

[Danmar]

I have assiduously tracked our expenses for over 20 years. I start by setting up the expected expenses for the next year split into about 30-40 categories grouped by each of our homes as well as a general and travel grouping. As I progress through the year I put the actuals in while keeping the "budget" for the remaining months. This allows me to forecast what our net cash will be for each future month.

I think simple tracking is a very important starting point to taking control of your finances. This may or may not progress into a future budget but in most cases it probably will.

 

[Asher Aion]

After 25 years as the treasurer of our companies and tracking spending each month, I found E-R.Org and the light bulb went off for me as well - track our personal expenses. Just duh.
The hard part is working with DW. Although she is very frugal, we don't always see the same needs. Now at work I have authority to make decisions....

 

[Corporateburnout]

I use Quicken to show me my YTD spending by category. Transactions are assigned a category when entered or downloaded, much of the category entry is automatic.

+1.

I tracked our spending on Quicken for the last 15 years and knew our expenses within 90%-95% accuracy primarily because DW is not big on tracking her spending as closely as I do. Now that I'm retired we track it more closely because I have the time and I enjoy it as well. I'm glad to see that our YTD spending is 8% under budget. I like Quicken's detailed budget vs actual and cash flow reports.

 

[Dawg52]

After 25 years as the treasurer of our companies and tracking spending each month, I found E-R.Org and the light bulb went off for me as well - track our personal expenses. Just duh.
The hard part is working with DW. Although she is very frugal, we don't always see the same needs. Now at work I have authority to make decisions....

I too did the same for my company for 25+ years. But do not keep detail spreadsheets for my personal spending. I know in total what the outflow is and I also know my swr is barely over 2%, so just don't see the need for all the detail. You would think with my back ground, tracking expenses would be the natural thing to do.

 

[NW-Bound]

As I use Quicken to keep track of my investments, I also let it download credit card and bank account transactions. About the only thing I need to do is to reclassify some downloaded transactions, such as to move some gas money from car expenses to RV fuel cost for a better classification.

I only started to do this in 2010, as I switched to Quicken from MS Money, when the latter was discontinued. I used MS Money for portfolio tracking for many years, but did not use it to track expenses.

Now, I have all financial info at my fingertips. How much was my electric bill last year? When did I buy my RV tires, or that battery at Costco for my car? How much for that house painting bill? No need to keep or look up any receipt. A few mouse clicks and I have the answer.

I am sure there are other software like Quicken. With today's computer and the Internet, there's no reason I have to spend time doing manual records.

 

[BBQ-Nut]

Each one of these responses sounds like 'me'.

When co-w*rkers asked for advice when I told them I was retiring this year, first thing I would say - figuring out what your expenses is one of the most vital steps in making an informed evaluation on if/when you can FIRE.

It can also help inform your investment strategies to get to FIRE sooner.

 

[tmm99]

I see a lot of people here using Quicken. I have been using Mint to track my expenses and my spending trend. Can Quicken do more than what Mint can do? (You cannot create new, main categories with Mint for one.) Can you use Quicken from multiple computers?


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[Sarah in SC]

I used to use Quicken, but Mint is so much easier and can be accessed from mobile. And it is free. I prefer it, just because I don't need the Quicken investment tracking, since all our investments are at Schwab and I can get all the reporting I need from that.

 

[NW-Bound]

Yes, you can create new categories or subcategories. I have installed Quicken on two computers, but use it mostly on my laptop. If you set up the file location to be on a networked or shared location, then they will use the same data record but I do not do this.

I do not have a budget, as my expenses are not rigidly structured. I need tracking data to make discretionary spending decision through the year. If I have surplus money, I will do some home improvements, for example. Or I can take another trip.

 

[boog]

I see a lot of people here using Quicken. I have been using Mint to track my expenses and my spending trend. Can Quicken do more than what Mint can do? (You cannot create new, main categories with Mint for one.) Can you use Quicken from multiple computers?

You can create new categories and subcategories as needed in Quicken. Quicken isn't multi-user, but this is how we use it from two computers: Ours is a Mac household and Quicken is installed on DW Mac Mini (PC version of Quicken running under Fusion VM). I access her computer via Screen Sharing from my Mac Pro and can run Quicken remotely.
We both have the mobile Quicken app on our phones and enter essentially all our transactions in real time. When we are back at home at the desktop computer, we sync and all our transactions are quickly up to date without having to key them in. This has saved much time tediously entering transactions. Now we mainly use the desktops for running reports and analysis.

 

[H2ODude]

Ridiculously habituated to Quicken. At 3% WR plus pension and yet to take SS, have no need to "budget" but have innate need to keep track of where it's going and if something exploded what we could live on. I've done this for 4 years of retirement and in so doing have used this to crank the 2.5% to 3%, so it has a purpose not in controlling as a budget but to encourage spending it more freely.

One other benefit of Quicken (or other such program). I make notes sometimes as to what something was for, and travel expenses are pretty obvious (tix to say London). Then when we start pondering "when was it we did x or y?) I can go back in the database and find that "wow! that was a lot longer ago than we thought!"

 

[NW-Bound]

I will add here that Quicken is not without its quirks. It has some bugs that have driven me mad. I have learned to work around it, but there has been some swearing and cussing.

 

[Car-Guy]

I tracked my expenses/spending by categories for a number of years before I retired and for a short while after I retired. It "was" a useful exercise for me. My "needs expenses" were very consistent over the years. Utilities, food, taxes, insurance, etc. After a while, I found I could just add on inflation and be pretty close each year without all the tracking. However, my "want expenses", traveling, hobbies, vices, fun stuff, etc varied a lot year by year. Anyway, I quit all the tracking (except for one or two that I need for tax purposes). Today, I just keep track of my total network worth. As long as it is going up, I just don't worry about it anymore