The One Thing More Important Than Budgeting


15 Comments
Tracking Expenses

Throwing out a headline like this one is pretty much blasphemy for a supposed “budgeting” site. If you know anything about us, we sing the original Queen B(udget) praises every day of the week and twice on Sunday. Did we just clickbait you? No, no, no. We’d never subject you to that… but you’ll never guess how much the next paragraph is going to shock you! (See what we did there?)

But I really do want to talk about what’s more important than budgeting. Umm, nothing, you may be thinking. And you’d be wrong. Yes, very wrong. Budgeting is at the very core of everything. But if we could choose between this thing I keep alluding to and budgeting, we’d choose the thing. And what is said thing?

Tracking your expenses. Tracking your expenses, more than anything else, will affect your spending behavior. And by tracking expenses, we mean actively recording your purchases and not just reviewing your bank statement on occasion. Now to be fair, Johnny and I believe that budgeting and expense tracking go hand in hand. To us, one is incomplete without the other. But many others choose to budget without actively tracking their expenses.

So why are we betting the whole kit and caboodle on expense tracking? Because there’s no faster way to learn and understand what’s happening with our money on a regular basis. It forces us to think about every dollar that leaves our pockets, every swipe of our plastic cards, every memorized rattling off of our credit card number to our favorite takeout place (just me?). And by recording each of those expenses, we’re forced to think about it. Otherwise, we’d rarely give our spending a second thought. Dropping $300 on new summer clothes on a whim doesn’t register in our brains unless we acknowledge that we just spent that amount. And we don’t acknowledge it unless we record the expense somewhere.

To put it in other words, we need to get emo with our money. Our spending needs to hurt. We need to feel it, and there’s no way to do that without tracking. When Johnny and I first started budgeting, our preferred method of expense tracking involved us recording every single spent cent in a rudimentary, ugly spreadsheet. While the method wasn’t the cleanest or most pretty, that one simple act made us more aware of our spending habits and budgeting shortcomings than anything else. And because I knew all expenses needed to be recorded, it made me actually look at prices before I put items in my grocery cart, something totally foreign to me (sad, I know). It made me think Is this really necessary? before I pulled the trigger on any impulsive purchase. In short, it made me aware, more aware than I’d ever been before, of whose hands our hard-earned dough was winding up in each month.

If you’re already saving more than you’d ever want to AND you don’t track your expenses, keep on doing what you’re doing. Ignore this post. BUT if you struggle with spending each month and you wonder how to cut down on your expenses, lend me your ear: start tracking your expenses yesterday! If you think you’re saving all that you can and that it’s never enough but you don’t track your spending, start tracking it. Just do it one month. That’s all it will take for you to become a believer. You will find places where you can save. And you might not like what you find. Cutting ties with the overpriced gourmet doughnut shop down the street might be will be painful at first (just me again?). But the tradeoff is getting control of your money. And your life. And that sounds dramatic, but I’ma say it anyway because it’s the truth.

So what’s the one little-known trick you can do to take control of your life? (Another amazing click bait title, btw.) Start tracking your expenses. Try it. Just do.

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15 Comments

  • Reply Racheal May 15, 2015 at 7:54 am

    Preach!

    I agree – budgeting and expense tracking go hand in hand. How else does one stick to a budget?

    I currently track all of my expenses in a spreadsheet and it works wonders on my spending habits. However, I also track my husband’s, so it really hasn’t impacted his. Poor guy, he runs out of “Blow Money” about the 10th of every month. Maybe I should have him enter a few of his expenses so he “feels” it?

    Thanks for another great post! :)

    • Reply Danica May 15, 2015 at 9:47 am

      This is so true!! As a financial coach, this is one of the first things I tell people to do… even before creating a budget to follow; track your all of your spending for 2 – 4 weeks and find out what you are REALLY spending money on.

      Thanks for this awesome post.

  • Reply Katie Ball May 15, 2015 at 10:49 am

    Get emo with my money? :) I’m LOL-ing! :) Hehe!

    I agree that expense tracking is definitely the only way you can really come to terms with what you’re actually doing with your budget. I can make a really pretty spreadsheet at the beginning of the month that leaves us with excess, but if I’m not paying attention to whether or not I am adhering to that budget, then I’m only wasting my time. Lately I have started sending my husband an email with our projected income and expenses for each two week period so we can both see our budget. Then every few days, I go in and reconcile spending with our budget. This helps keep us both “in the know” and aware of what we are spending. Of course we could be all 21st century and use an app, but I haven’t found one that works well with the amount of deposits and transfers we do each month (hubs is in grad school = inconsistent pay schedule).

  • Reply Diane May 15, 2015 at 11:24 am

    You are so right! And I confess… I’ve been so negligent on this front. I’ve done it before, but it’s been awhile since I quit. I’m going to make a fresh start and make it a new habit. I wanted to say TRY to make it a new habit, but I don’t want to leave myself an out… LOL!

    All my basic budget items and fixed expenses are tracked. It’s the extras where I fall down. I have no idea what my disposable income is spent on, other than what I remember spending! It’s time to remedy that.

    • Reply Johnny May 24, 2015 at 10:27 pm

      “I have no idea what my disposable income is spent on, other than what I remember spending!” Isn’t that so weird? It’s like we all suffer from short-term spending memory loss. That’s accentuated by the fact that once I lose track of a few, the OCD in me just wants to throw in the towel because it won’t be perfectly accurate now… so much bad.

  • Reply Rob May 15, 2015 at 10:46 pm

    Yup, I totally agree, Joanna. The devil is in the details. The more carefully and accurately and frequently that you track your expenses then the better is your resulting budget. Now what do we mean by tracking expenses? Well it’s just not recording them somewhere – although that represents most of the dull laborious work – but it also means tracking the “trends” in your expenses. Like, for instance, if you see that your car repairs are getting more frequent and/or are rising over time then maybe it’s time to start saving for that new caddy (or whatever wheels that you can afford)!

    That all said, I live by 4 key things financially: tracking expenses carefully, budgeting accurately, investing wisely, all to support intelligent goal setting. They all are dependent on each other.

    • Reply Johnny May 24, 2015 at 10:29 pm

      Great keys. Those will now and forever more be referred to as The 4 Keys of Rob-dom.

  • Reply Ronnica, Striving Stewardess May 16, 2015 at 3:04 am

    Tracking expenses IS key. I need to be more honest with myself where my money is going if I’m going to cut my spending further.

  • Reply Bree May 16, 2015 at 4:59 am

    the budget software YNAB (You need a budget) is perfect for both expense tracking and budgeting all in one. Go to YNAB.com for a free month trial!

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  • Reply Ramona May 18, 2015 at 3:19 pm

    I stopped tracking our expenses for the past 3 weeks (we were in a vacation and I thought I’d just relax) and it was shocking to see how much money I spent and it was difficult to account for it. The good thing is that I didn’t go shopping too often, so it wasn’t that hard to start remembering at least some of the details, but it was annoying to not know exactly where my money went.

  • Reply Seeking guidence and grateful May 18, 2015 at 4:54 pm

    Hello everyone,

    I’m seeking some advice for my particular situation. If anyone could provide some suggestions I would greatly appreciate it.

    I am 29, single living with a good family friend roommate in Southern California. I have a relatively stable job making $84,000 with one month of paid vacation and PPO 80/50/50 ish health and dental insurance plan paid for.

    I have about $50,000 in debt. About half of that is a car loan debt. The rest is student loans and credit cards. In three months I will be moving within walking distance to work and selling the car and all the expenses that go along with it, about $966 a month for everything based on current usage trends.

    That will cut me down to roughly $25,000 which I hope to aggressively pay off in a year.

    I have gone to using cash to pay for things. I had a couple recent big financial bills of $1000 vet bill and $3000 dental bill. I have really bad teeth and there is always something that comes up with them. The pet has been adopted by another family so that is another expense out of my monthly budget. It seems like there is always something that comes up that sets me from paying off the debt more rapidly.

    My portion of the providing a roof over my head expenses is about $1,234.

    I cook a lot more and bring my lunches to work often. Though I like to shop at Trader Joe’s and farmer’s markets, which the food is of much higher quality, but pricier compared to the stuff you find in the big box grocery stores. I guess I’d rather pay for food then related health concerns later. I spend about $350 a month on groceries and $250 eating out.

    I don’t like coffee. My Starbucks is a $1 soda from the gas station.

    I have an iPhone 5 on a discounted no-contract cell phone service for $40 a month.

    I have no desire to buy a house, especially in the real estate market where I am at.

    How do people get ahead financially in high cost of living areas? Do I not make enough to live here? Should I make more money by getting a second job? I feel like I am challenging myself adequately in my current field, but there are other areas of life and work I would like to explore on a part time level. Get married? I’m gay and have all the stigmas to deal with what goes along with that.

    Seeking guidance and grateful

    • Reply Johnny May 24, 2015 at 10:39 pm

      Thanks for sharing!

      When Joanna and I moved out to NYC, we were making roughly what you are making (combined) and in full debt repayment mode. Our most significant savings came from minimal personal spending. Clothing, gifts, entertainment, vacations, etc. Once you start tracking those expenses, you might find there’s a money leak there. We did our best to stay social by inviting friends over to our place instead of going out to eat.

      Side income is also a great option. It’s nice knowing that all of that extra income can go directly to whatever goal you’re working toward — in this case, debt.

      Congrats on already identifying trouble areas like axing the car payment and effectively halving your debt. The most important thing is that you have the right mindset. Be patient and give yourself a few months to really get in the groove with your newfound budget and you’ll see progress in no time.

  • Reply Laura @ Making Baby Provence May 31, 2015 at 8:01 pm

    I’m in love with this entry! We have been tracking our expenses for at least 5 years. I’m addicted! My husband loves my weekly email updates showing him how well we did or why we are eating Ramen this week. 😉

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