On and off again for the past few months I have tried to track my daily expenses. A lot of personal finance books, including Your Money or Your Life, recommend this technique as a means to track purchases and to rein in unnecessary and unplanned spending. This isn’t the first time I’ve tried this technique, I’ve tried at least two other times, but have yet to maintain the practice for longer than two weeks at a time.
I’ve decided to try again beginning November 1st. I’ve set a rather small goal for myself, only one month of tracking. So far I’ve been able to keep track of my expenses, but it’s only been five days. Originally I was writing down each expense in a small notepad, but I couldn’t seem to stick with this technique, so now I’m simply holding all of the receipts in my wallet and writing down the tally of those receipts at the end of the week.
I was wondering if anyone out there keeps track of their daily expenses and if so if you’d be willing to share some tidbits of helpful information that might help me stay focused on this task.
Why would you keep the receipts for small cash purchases once you’ve entered them?
I keep my Visa card receipts in a box on my desk but once I’ve entered a cash receipt into the system I recycle it. Unless, of course I paid cash for something with a warrantee. But receipts for small grocery runs, magazines, snack food, bus tickets etc don’t get kept…
I am 29 and have been tracking my spending to the dollar and by category for nearly ten years using Microsoft Money. It take discipline, but if you consistently keep receipts every time you make a purchase, it isn’t that difficult to spend 10-15 minutes once a week updating MS Money. It is so nice to always know the true balances of all my accounts (cash, checking, credit cards, loans, investments, etc.). The cash flow forecasting and bill paying calendar is also nice.
I’ve been tracking our expenses for almost 10 years using an Access database, and balancing the books (making sure I’ve accounted for every cent) for almost 7 of those. (I do wonder occasionally what a market research company would pay for such detailed spending records!)
The most important things I’ve learnt, through trial and error are:
– ask for a receipt for everything
– have a way to record ‘receiptless’ purchases (we have small red slips called ‘record of outgo’ for those times when getting a receipt isn’t practical)
– have a place to accumulate your receipts (we have a tray on my desk at home, and we’re now well habituated to put everything there, although it took some practice in the early days)
This means that no matter what system you use or how frequently you update your records, you have a piece of paper for every single amount that you’ve spent. I’ve also found that cash purchases are the hardest to track (I regularly tear my hair out trying to find out why I’m missing some cash), so we put as much as possible on our credit cards, and pay them off in full every month.
I spend about a day a month entering receipts, checking account details, and tallying everything up, but it’s made a huge difference to our financial freedom. We always know how much money we have and that we’ll have enough to pay the bills (and the mortgage). It also allows you to make sure you’ve been charged what you expected for everything. I’ve written myself instructions to remind me of everything I need to do each time.
I mark each receipt/slip with a unique record number (generated by the database) so I can go back and look at the details on the receipt if I need to in future. I put small receipts on a spike and large receipts in a folder. I group everything in categories in the database, and use that to figure out how much we spend weekly, and set that amount aside out of our income. It’s a budget (not in the usual ‘I must spend less’ sense) that gives us the peace of mind that we’ll be able to buy what we need. It also allows us to put money aside as savings and be almost debt-free. We have amounts in a high-interest account ear-marked for all kinds of things – holidays, renovations – and we’ve even managed to start our own business from savings.
I think it’s important to keep trying different systems and routines until you find one that works for you and sticks! Ours has certainly evolved over the years. I also found it quite useful to do an introductory bookkeeping course. I did the course because I was keeping business books, but I learned a lot about financial record keeping that was immensely useful in setting up our personal financial records. I’d highly recommend reading “Your Money or Your Life” and playing “Cashflow 101” lots to get a great handle on your money.
I’ve certainly found it frustrating at times, but also exhilarating to control my money, instead of it controlling me. I wish you all the best!
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