For the first time in my life, I actually tracked every penny I spent in the entire month. I am convinced that tracking and monitoring your daily spending can change the way you view your variable expenses. It did for me. Here’s a snapshot of all of my spending in January for gas, food and all other expenses that weren’t fixed.
It was an extremely insightful exercise. A few of the things I learned:
1. Manual tracking of your spending makes you much more conscious of how much you spend. Instead of using an app or Mint or any other fancy tool, I just started a spreadsheet. The best way to track your spending is to do it yourself, very manually, at least for the first few months. When I spent money, I either kept the receipt or entered the amount right away. I found myself not buying things I normally wouldn’t think twice about because I didn’t want to account for it in my spreadsheet. Great! Now I’m even trying to save face for Excel. But it worked. I probably would have gone to In-N-Out another two times and gotten my hair cut the same day I did my eyebrows. But the eyebrows make a difference in how I look, where as my hair is always messy, so who cares? $40 saved!
2. There are always unplanned or occasional expenses. I was doing pretty awesome this month on my discretionary spending, until last Wednesday rolled around and I bought my FinCon12 ticket. I was planning on going, but I hadn’t saved any money for it. I bought my flight since the fares are low and Southwest doesn’t charge you change fees. Next month, it’s my oil change/brake pads and flights for a wedding in April. And there’s car registration, website hosting fees and a bunch of other irregular things coming up in each month. So there’s your fixed budgeted expenses like rent, insurance, car payments and utility bills. Then you have things you know will spend on that are variable expenses like food, gas and entertainment. But what about those one-off items? If I really want to get out of debt, I have to acknowledge that irregular expenses continue to occur regularly. My savings fund needs more juice. I also need start separating that money into a few different categories: Savings, down payment fund, car maintenance/registration, gifts, travel.
3. Damn I eat a lot of chocolate! Practically all of those under $5 purchases in the food column are me eating chocolate, candy or Cheetos from CVS or the 99-cent store that’s right by my house. It’s a bad habit, I know. But it breaks up a long afternoon in my cubicle, or an evening at home when I’m trying not to go out and spend money elsewhere. I want to cut this down, but I’ve also noticed that if I go too long without eating, I feel like throwing up. A girl’s gotta eat. Preferably Kit-Kats, Sour Punch and Reese’s Sticks (why don’t they sell those everywhere anymore? I have to go to the 99-cent store to find them. Are they discontinued and 99 Cents Only got the last truckload? Hang on. OK, according to Wikipedia, they’re still available. Phew!)
4. It’s OK to jump on a good deal if it really will save you money. My company-issued Blackberry was dying and our office manager said I could get an iPhone if I wanted to pay the $50 difference. I totally jumped on it because I had been counting down the days to when I could upgrade my personal phone to an iPhone. But now I won’t have to pay $200 for a new phone OR the $15/month required data plan. I have an unlimited data plan for my iPhone and I use my own phone for calls. It’s a little less simple than just having one phone, but it works.
5. I would benefit from being more detail-oriented. I should really track my spending every day. I can tell I would save money. It’s an extra motivator to spend just a little less on the things that add up: snacks, meals out and even gas. I was surprised to see I only filled up my gas tank three times this month when I drive almost daily. Being conscious of what you spend makes you start changing habits, even a little bit, and that will start to add up for you.
That being said, I don’t really like the idea of keeping track of what I spend. It’s my old mentality of how tracking every penny is being cheap and/or lame. Believe me, I know that’s not true! Based on the unfiltered, painstakingly detailed spending accounts of big-name PF bloggers, I know it can make a big difference in your wealth. But I don’t like to think that I am getting caught up in the petty details when I could be coming up with new ideas, out making money or cutting big expenses like car payments. So I’m going to balance those two ideas. I am going to keep up with the spending tracking sheet. I may not post it every month because I don’t like to share every single dollar amount of my life (it’s boring, you’re not missing anything!), but I will acknowledge if I did it in my monthly debt update post. I’ll also start talking more about ways I am increasing my income. For example, those two eBay expenses shown above are not me buying stuff, but rather updating my eBay inventory. My monthly income from eBay is currently negligible, but I hope to increase it to $150/month in the next few months. All in all, tracking my spending was a great start to 2012 and monthly goals are keeping me on track for meeting my 2012 resolutions.
So I have to know: which of you track every penny you spend, every month? Does it work? Did you hate it at first but now love it? Have you still never tried it? Let me know!
PS- In case some of my explanations weren’t clear…
In-N-Out is my fast food burger of choice. I get a grilled cheese because I was a vegetarian for four years and I still love the meatless version.
85 degrees is an awesome Taiwanese bakery. You have to stand in line out the door for this place. Worth it!
800 Degrees is the newest creation of Umami Burger’s founder, Adam Fleischman: a make-your-own Neapolitan pizza that starts at $5 plus $1 for each topping. I’m definitely going back.
C & O Cucina is down the street from me and is a beloved Italian place in LA. We always say the guy who hands out the free garlic knots in this place must have such high self-esteem, everyone is always happy to see him!
Sprouts is a health/grocery store with cheap local produce. I go there to overload on avocados, watermelons and oranges, among other things. TJs is Trader Joe’s, the trendy but delicious small grocery store.