Tracking Your Expenses Doesn’t Work
I have a confession.
To be honest guys, I’m not the best when it comes to tracking my expenses. At least not in the traditional sense of writing down on a piece of paper or excel spreadsheet the date, amount, and location of my purchases.
Years ago, I tried to write down all of my expenses. That lasted for like three days. Ain’t nobody got time for that! When you’re working full time, kids need to be put to bed, and homework needs to get done, writing down your expenses is the last thing on the list of things to do. I get it! And that’s ok. I’m here to tell you that you can still be successful without tracking every penny.
Tracking my spending doesn’t require much work. But, it’s always available and accurate when I need to see my spending.
I’m not saying don’t track your expenses. I just think in 2018 there are a lot of better ways to do it so you can focus other things.
Although I don’t track my spending I’m very aware of it. I wish I had the time to write everything down, but I don’t. I have often recommended to my clients that they track and write down their expenses for 1-3 months, and that’s it. This can be super powerful if you’re just starting out or trying to get your spending under control. No one can write down every expense 100% accurate in a year. It’s just not sustainable. Most people give up because it simply takes too much time. And let’s be honest, it’s boring.
“You can’t manage what you don’t measure”
So how do we do it? The purpose of tracking your expenses is not to make yourself feel guilty each time you spend money. It’s to be clear on how much money you spend on what in a given month, year, or multiple years. It’s to help you understand how much of your monthly income do you spend on things you value or don’t value. If you realize you’re spending too much on fast food you can cut back on it. But, how do you do that if you don’t know what percentage of your income you spend on fast food? If you make $3,000 a month and spend $875 on food that’s 25% of your income. You shouldn’t be eating burger king anyway.
Do you know how much money you spend in an entire year? If I was to ask you, “I want to know, to the penny, everywhere you spent money in 2017.” Could you tell me? Most people can’t. If you were to ask me, I could tell you exactly how much I spent at Costco, Amazon or how much I spent on car repairs. This is powerful. I know exactly how much money I need to make to cover our basic living expenses. It’s also opened my eyes to spending money on things that I value. If you’ve spent thousands at Amazon but you can’t remember what you even bought you may want to ask yourself if buying things on Amazon brings you value or is it clicking confirm order and getting a package two days later that excites you?
Here’s the bottom line. I don’t want you to have to track everything you spend by keeping track off all the receipts (unless you choose to). But I want you to be aware of exactly what you spend without the hassle. The best way I know how to do this is by using the free app Mint.
Read: Personal Finance Software that will Simplify your Money
Over months and years of having Mint keep track of each time you swipe a card, you can look back and see exactly where you spent money. You can set up a budget, goals, and track your progress. Some people love to do things on paper. If that’s you, awesome! Do what works for you. It doesn’t hurt to have something in the background tracking it for you in case you miss a few things.
That’s it for today! Let me know how you track your expenses in the comments below!
