Finally stopped tracking our spending - am I missing any reasons to do it?

[Scuba]

I have tracked our spending at a reasonably detailed level for 25 years. It was invaluable in planning our financial future and confirming we were financially ready to retire. Now that we’ve been retired for over 8 years, I decided I don’t really need to track it anymore. We have substantially more financial assets than we did 8 years ago, so I am thinking we no longer need to think too much about how we spend our money. The notable exceptions could be things we need for tax purposes such as medical expenses, charitable contributions, and any major capital expenditures on our home so we have a reliable record of our cost basis in the event of a future sale.

Are there any other categories or reasons to track detailed spending? I did a “macro” analysis for 2024 and looked at cash that came in, cash that went out for major non-recurring expenses such as major home renovations, and the change in total cash balance year on year, enabling me to see how much in total we spent on day to day living including travel. The “normal” cash outflow looked about the same as the last several years so I decided not to do all the detailed work to document every category of spend.

I have to admit it was rather freeing, but I’m so accustomed to tracking that I’m wondering if there is a good reason to do it.

 

[audreyh1]

Quicken tracks our spending already and it’s automatically categorized. I mainly use Quicken to track our cash flow, scheduled bills, transfers etc. I import transactions and reconcile statements, so the spending info happens automatically. I occasionally look at a spending report.

 

[Koolau]

I have tracked our spending at a reasonably detailed level for 25 years. It was invaluable in planning our financial future and confirming we were financially ready to retire. Now that we’ve been retired for over 8 years, I decided I don’t really need to track it anymore. We have substantially more financial assets than we did 8 years ago, so I am thinking we no longer need to think too much about how we spend our money. The notable exceptions could be things we need for tax purposes such as medical expenses, charitable contributions, and any major capital expenditures on our home so we have a reliable record of our cost basis in the event of a future sale.

Are there any other categories or reasons to track detailed spending? I did a “macro” analysis for 2024 and looked at cash that came in, cash that went out for major non-recurring expenses such as major home renovations, and the change in total cash balance year on year, enabling me to see how much in total we spent on day to day living including travel. The “normal” cash outflow looked about the same as the last several years so I decided not to do all the detailed work to document every category of spend.

I have to admit it was rather freeing, but I’m so accustomed to tracking that I’m wondering if there is a good reason to do it.

Yeah, we simply look at cash in and cash out for the year plus change in Net Worth yearly. That's all we seem to need for our comfort level. Even after 20 years of FIRE, NW is still going up (knock on wood). No detail really needed.

 

[FlaGator]

Congratulations on giving up trying to be an obsessive. If that tendency isn't hard-wired, it hard to develop and maintain. If it is, counseling won't help

I have it. Was helpful a few years ago to know where the money had gone to figure out where changes could be made. Different circumstances now, really not necessary.

But I will fight myself to the end to ensure that the $6 I spent at Ace Hardware tonight is properly categorized as "New Home Setup"

 

[dmpi]

I no longer do it. I just track my net worth/income and I make sure I don't run out of money before I run out of time.

 

[bluelight]

I've tracked our spending since 2011. First with a bank that had a money management software that would track all expenditures which I then downloaded into a spreadsheet, then last year with YNAB. I don't need a budget as even in retirement our income exceeds our expenses, but I found that I like to keep the record of what we spent and when we spent it. For taxes, I have the amount that we spent for medical and pharmacy at my fingertips. It also comes in handy to remember the date we purchased something or had service done.

 

[swakyaby]

I tracked our spending for 2 years prior to retirement. After that, have simply looked at whether our total investment portfolio is increasing or shrinking.

 

[mrfeh]

I tracked our spending for 2 years prior to retirement. After that, have simply looked at whether our total investment portfolio is increasing or shrinking.

This could potentially be dangerous. It's your spending that's important.

Let's say investments increase by 12% some year, and you spend 10%. Portfolio value has increased, but this is certainly too much spending, unless one is near the end of their plan.

To the OP - I don't think you need to track categories of spending, but you do want to know your withdrawal rate.

 

[Ronstar]

I'd say that 25 years of tracking is good enough, OP. That's enough to get a good projection of retirement spending. Just keep an eye on total spending from this point forward.

I tracked for about 25 years also, then went to a system where I only track total spending. Total spending method has worked for us since we retired.

 

[ponyboy]

Unless close to retirement and or retired, I personally think it's a little weird and overkill to track all expenses. I guess if you're struggling or have no grasp of what you spend vs what you bring in.

We just always lived below our means so tracking expenses never made sense. All I can picture after coming home from vacation is someone running to grab their expense book and writing down all the receipts they accumulated, lol. Almost like a drug addict getting their fix.

 

[audreyh1]

Yes, total annual spending would still be important.

 

[marko]

I'm less interested in what I spend on and only interested in how much on an annual basis. Turns out, we spend about the same YoY but on different things.

I run my Excel check register out to the end of the year with all my core expenses, add in $X average for monthly credit cards, minus SS, monthly withdrawals and other incomes and it gives me a good approximation of what I'll spend this year as I essentially have my year-end balance in January.

Obviously, it gets more accurate towards year-end but it comes fairly close by June and it's all automatic.

I try not to withdraw more than I need and aim for a minimal checking balance at year-end so: withdrawals + SS + other income = spending, plus/minus within a few $k

 

[frank05]

This could potentially be dangerous. It's your spending that's important.

Let's say investments increase by 12% some year, and you spend 10%. Portfolio value has increased, but this is certainly too much spending, unless one is near the end of their plan.

To the OP - I don't think you need to track categories of spending, but you do want to know your withdrawal rate.

Next year you will notice your net worth is decreasing and you will cut back on spending. A year of overspending won’t make a difference unless you calculated your retirement to not include any unusual expenses.

 

[Lewis Clark]

We do not budget and do not track spending in detail. But I do track the total spending every month. And I make a note of major cash outflows (such as new appliances, new HVAC, vacations, and estimated taxes).

We are fortunate to have a low enough withdrawal rate that the details are no longer important to us as long as we feel the total spend is within reason.

 

[grasshopper]

Using Quicken to download credit card and checking spending is as easy as getting up for my morning coffee. Besides Ms G always wants to know when the last dog teeth cleaning was, or how much our travel was 10 years ago.

 

[punkinhead]

Once every 5-10 years I'll track spending in detail for maybe a month to see if I've taken up any bad spending habits. Other than that we don't do any tracking besides making sure the amounts in and out of our checking each month are reasonably balanced. That's worked for us for many decades.

 

[EastWest Gal]

Our w/d rate is about half of what we could spend based on multiple calculators. I don't track to the penny but get an overall picture, since we have fixed withdrawals for things like sewer and trash, HELOC repayment, etc. and we put everything else on our credit cards which get paid off every month. I never had time to track too carefully throughout my career. Our NW is the same as it was in 2021, despite purchasing two cars and doing a major remodel this year, and gifting the max in equities to DS each year. If it weren't for those expenditures, it would be higher.

 

[ShokWaveRider]

We do it for curiosity more than anything else. We still can only manage to spend ~30% of what we get in an all passive (Fixed) income portfolio. And, last year I considered our spending extravagant! And no we are not gazillionaires, just normal retired folks with no children or other debt.

 

[mrfeh]

Next year you will notice your net worth is decreasing and you will cut back on spending. A year of overspending won’t make a difference unless you calculated your retirement to not include any unusual expenses.

That's fine, but you still want to know what your total spending for the year was, not just the difference in your portfolio value (not net worth) from year to year.

Variable percentage withdrawal - Bogleheads

 

[pjigar]

At a very least, you need to track annual spending total from all accounts. Was the spending less than SWR amount of last year plus inflation? If yes, then you are golden. A lot of retirees struggle to understand that you can't spend the entire portfolio cashflow/gain because your portfolio's purchasing power is decreasing year by year (due to inflation). Some of the gains must be retained to 'replenish' the purchasing power of the portfolio.

 

[Mark1]

I don't track spending, but I do document payment amounts on all bills, health care, checks, etc. such that I can review total spend amount for each month/year. This also allows me to look back and review amounts/trends. We put everything possible on CC for 2% cash back, so I do have a separate worksheet to track insurance amounts for look back purposes. I also track improvements to our house/property (and maintain receipts) for future increase in cost basis when it's time to sell.

 

[aja8888]

I have a spreadsheet and it's pretty simple.

Income monthly (SS, other) minus money spent (CC's, autopays, checking (debts), tax payments). Then it totals by month. I look at It and I can see what months are + or - and the running total. I really don't use it for anything but globally tracking "in" vs. "out".

It's not a planning tool as most planning is pretty well known in advance and for Big items, I just pay for them when needed. Routine spending is not something I am obsessed about, because, in general, I have to do anyway.

 

[ElizabethT]

Congratulations on giving up trying to be an obsessive. If that tendency isn't hard-wired, it hard to develop and maintain. If it is, counseling won't help

I have it. Was helpful a few years ago to know where the money had gone to figure out where changes could be made. Different circumstances now, really not necessary.

But I will fight myself to the end to ensure that the $6 I spent at Ace Hardware tonight is properly categorized as "New Home Setup"

+1 Obsessive type over here.

Fourteen years into FIRE, and still tracking away. I liken it to the same reason I get on the scale each day - it provides awareness and accountability.

This year our budget will have an entry for a new car - likely $40,000, and another for a cruise departing from Iceland - likely $20,000. I feel comfortable spending both of these amounts because they are well within our budget. Which I know, because I track the small things in and amongst the big things.

I very much enjoy seeing how we spend our money. I think I'm a more discerning shopper, and partaker of events, travel, and entertainment, as a result.

 

[FLSUnFIRE]

Um, because it's fun! I may not be right in the head but I get a little joy every time I log an expense. I've got speadsheets going back to 1998 the year I was fully launched and on my own after college.

I don't budget but like looking at trends and the feedback loop is helpful to catch myself if I'm drifting.. usually not strictly financial but if spending on alcohol or dining out out is spiking it is an indicator that I'm probably not eating as healthy as I prefer.

 

[Ronstar]

I have a spreadsheet and it's pretty simple.

Income monthly (SS, other) minus money spent (CC's, autopays, checking (debts), tax payments). Then it totals by month. I look at It and I can see what months are + or - and the running total. I really don't use it for anything but globally tracking "in" vs. "out".

It's not a planning tool as most planning is pretty well known in advance and for Big items, I just pay for them when needed. Routine spending is not something I am obsessed about, because, in general, I have to do anyway.

This is exactly what I do.

My spreadsheet has a monthly spending column. Last month's ending checking balance - this month's ending checking balance + annuity deposit + ss + misc income = monthly spending.

Easy peasy.