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Tracking Your Spending – Some Go To Extremes. Does It Help You Save?

May 18, 2010 · 15 comments

in Personal Finance

I love going to library book sales. Our local library sells books every week for very low prices, and I usually stop by at least a couple times a month. I don’t feel so bad about buying a book and not finishing it if it only cost me 50 cents. Plus, I shop around for books that others may enjoy.

Book purchased at library book sale with note that was found inside

While perusing the History section, I came across a book on Abraham Lincoln (See picture). Inside the book was a note from the previous owner, which stated: “Country Fair flea market. Warren – 11-1-81. Paperback – Abraham Lincoln by Carl Sandburg “The Prairie Years – Volume I”  A.M. pd.: was – 75 cents – Paid 50 cents”

I found this little note interesting on so many levels. Here is someone that bought a book for 25 cents cheaper than the cover price, and they took the time to make a detailed notation of this transaction.  Was this purchase added to their list of expenses for the month?   Was the 25 cents added to her their worth?  I have no way of knowing,  but I suspect this person lives very frugally, and his/her financial life is in order.

Finding this note made me think about how I track my expenses. If I had to write a note recording each of my transactions, my hand would fall off. I would probably have to rely on a dictophone and hire a transcriptionist.  I have a general idea of where I am compared to my budget for the month on items like groceries, but I am sure I do not track my spending as well as I should.   (However, I do review my credit card statement each month, both to keep an eye on how we are spending our money and also to check for fraudulent charges.)

I am almost afraid of what I would find out if I carefully recorded each of my expenses and shared what I found with others.  My addiction to Panera would be known to all.  You would also be shocked if you knew how much I spend on those single serving Mandarin Orange cups that Del Monte just came out with.   I am sure that being held accountable to others for my spending would stop me from certain purchases.  However it is a balance of enjoying life and being fiscally responsible.  I will have to think about this further…

So, how closely do you keep track of spending?  Do you find it keeps your expenses in check?

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{ 14 comments… read them below or add one }

Young Mogul May 18, 2010 at 9:56 am

I read the book, ‘Your Money or Your Life’ and it required that the reader do just that. The author INSISTED all throughout the book to track EVERY transaction with money–whether it was a dime found on the sidewalk or a quarter lost in a vending machine. It is drastic, but she insisted it was necessary to get the full effect of the book. So, I tried it for 1 month.

The way I tracked the transactions was with a check book ledger. I wrote down every transaction with money in this ledger. I also kept a money bag in my car and put all of my receipts for the month in it. All in all, it wasn’t too bad because I knew it was only for a short period of time.

What this activity did was give me insight into the Miscellaneous money I was spending here and there, unaccounted for. I would, of course, account for bills, spending and entertainment money, even gifts, but those miscellaneous and/or impulse purchases were what was killing my budget. I solved this issue by adding a miscellaneous category to my budget, which I did not have before.

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Kris May 18, 2010 at 10:08 am

Young Mogul – Just curious, did it change your spending long term? Or was it more just to help you track your spending and help you budget for miscellaneous spending?

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Young Mogul May 18, 2010 at 1:07 pm

It definately changed my spending long term. I am not as meticulous about every single cent, but I still use the check book register and still keep the money bag in my car for receipts. It definitely made me more aware of my spending habits. Once I was aware, I could no longer spend frivously without feeling like I was wasting money, and as a result, wasting the energy that went into earning the money.

The book, ‘Your Money or Your Life’ defines money simply as, what we are willing to trade our time for. In the book, it calculates our “REAL” hourly wage, i.e. what we earn once we take into account the cost to commute to work, the wardrobe, the lunches eaten out b/c we are too tired to pack a lunch after a long, stressful day at work, etc. Once we factor in all of these variables and subtract from our actual hourly wage, then we get the “real” hourly wage.

It goes on to help us see how much “life energy” that new pair of shoes costs in hours worked to pay for them. It REALLY changes your perspective on spending and determining if items are REALLY worth the cost.

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Kris May 18, 2010 at 1:19 pm

I will definitely check out that book! Thanks Young Mogul

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Budgeting in the Fun Stuff May 18, 2010 at 12:02 pm

I’ve been tracking our expenses for more than 4 years and it’s enlightening. We use less than $200 of cash a month, so I just put cash as cash and don’t record exactly where it went…everything else I can see on our credit card statements and bank records. In the beginning, it kept us on track, but now it’s just habit.

Last month was the first month that I didn’t keep a close eye on everything. I still checked Discover at least 4 times that month, but I didn’t actually write everything onto our budget sheet until yesterday. We successfully stayed on track without even trying. Apparently, practice makes permanent (which is a post I’m writing now, lol).

I will say this, opening our budget up to all my readers was hard. I knew I was being judged on the good and bad. Yeah, we save alot, but we also spend a lot more than some frugalites on food, entertainment, and vacations. I thought I’d be griped at for having a biweekly housekeeper and lawn dude. I knew I was going to hear alot of questions on tithing or charities. But, it worked out okay. I haven’t been yelled at yet. I actually have a tiny financial confession going up on next Monday and our new budget going up next Tuesday…maybe I’ll get fussed at after all, lol.

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Kris May 18, 2010 at 1:01 pm

Budget, it sounds like you have things very under control. A lot of my spending is for last minute things needed like my son grew out of his cleats suddenly, or I have to provide team dinner for baseball, things like that. I think that what I do need is like what you said, a miscellaneous bucket for such expenses. Actually, I may need more of a vat.

I look forward to reading the posts you mentioned!

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Divine and Debt Free May 18, 2010 at 12:36 pm

This is a great post!! I also added you to my blogroll, love your site 🙂

I was introducted to “Tracking spending” through the dave ramsey program (financial peace university) we used what we called an envelope system. At the beginning of each month I was required to set aside cash for food, gas, and other misc things.

I tracked every penny for about 3 months and it was a great tool that helped me learn to stick to a budget. If there was no money in the envelope welp I couldn’t do it.

Now im all “Grown up” so I don’t use the envelope system any more but I do have an excel sheet which is basically an electronic check book register. It works great, and I use it everyday (Because I spend everyday) but I use my debit card.

its also funny that young mogul mentioned the “money bag” to keep receipts because I just started doing that yesterday!! Over the years of getting out of debt I have mad it a habit to know where every dollar goes so I can adjust my spending accordingly.

Like last year, my program tallied what I spent on my cell phone which was whooping $2300 dollars!!! I had a cell phone category on my spread sheet but all I did was entered the figures and left it. It wasn’t til year end that I saw how much I spent on my stupid Iphone. Needless to say I DUMPED the phone and got basic service. no more LARGE cell phone bills.

I said all that to say, tracking spending was the best thing I could ever do, I wasn’t always a nerd in this area but I am now. Plus now that I have my little receipt envelope, it will take me about 5 minutes to tally up my day and carry on.

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Kris May 18, 2010 at 1:10 pm

Thank you so much for the compliments. I too enjoyed your site this morning as I was looking at ‘The Demotivator’.

I am sure that was a big smack in the face when you saw that cell phone total. It is so true that sometimes those small amounts add up and make you scream.

I have also heard about the envelope system. It sounds very interesting, but I also hate dealing in cash. I do know that it works for a lot of people.

I think I am feeling more motivated to track my spending closer. I also think I will have to work on adding ‘no’ to my vocabulary. Not that I am a pushover and spend on everything my kids want – from from it. But I do give in to convenience items far more than I should.

Thanks for commenting!

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Squirrelers May 18, 2010 at 12:55 pm

Tracking spending on a daily basis is a great way to understand 1) exactly how much you spend, and 2)diagnose where the “problem” areas are in your spending. Granted, sometimes those so-called problem areas are fun areas:) But its a good idea, and helps you set and live within a reasonable budget.

I don’t do it every day now, though I have thought about going back to that for a while. My pattern has been to periodically do this, every so many years, for a month or two. This helps me assess where things are, and how they have changed over time.

I strongly recommend doing it, at least periodically.

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Kris May 18, 2010 at 1:12 pm

Squirreler: I agree it is a great idea to track your spending. I have always looked at it more from a macro level than a micro level. I think maybe I should also go in-depth just to get a better idea and see if it does affect my spending. It will be an experiment. I am great at finding deals and saving as much as possible. However, I probably spend more on discretionary items than I should.

Thanks for commenting!

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Money Reasons May 18, 2010 at 9:02 pm

I’m a lot like you when it comes to tracking what I spend! I even blogged about how I track spending, I called it an automatic budget. But basically all I do is look at my banking statement to make sure the spending is in check with what I expect! As for the what I expect, I have a spreadsheet that I tweak ever year to calculate what I should spend and save each month. It takes into account taxes, medical, and money spent on gas, personal spending, the kids 529 contributions and a bunch of other spending categories.

It’s simplistic, but it works for me 🙂

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Kris May 18, 2010 at 9:52 pm

Money Reasons- you are right, we are very similar! I check my banking online about once a week because I have nightmares of ever being overdrawn. I also am a little obsessive over adding problems. Once I screwed up by a thousand dollars, and that really almost came back to bite me.

The best budget is one that works for you. I still haven’t found a perfect system for our family.

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Divine and Debt Free May 18, 2010 at 9:42 pm

also mint.com has a software program that will calculate your spending.

all you have to do is plug in your bank info or credit card you use, and it pulls up all your data!!! it makes a pie chart (or something) that will break down where your money is going.

I would have actually LOVED this option but last time I was on this site my local credit union wasn’t in their system. so it wouldn’t work. But check it out. It will do your mortgage, credit cards, car payments, investments everything!!

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Kris May 18, 2010 at 9:49 pm

I have heard a lot about mint.com but I still have to check it out. I also am a member of a credit union, so I wonder if mine won’t be in their system either. Thanks for the info!

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