Sticking to a Budget: Tracking Expenses
In order to be successful with budgeting, you've got to first make a plan (budget) then execute (make sure you aren't overspending) and then measure how you did (leftover money at the end of the month). Man, it sounds easy when I put it that way, huh?
The hardest part of budgeting is often getting a flow, routine, process or system in place that makes it turn-key. How you budget is just as important as the why. And from talking with lots of people who have been successful with budgeting, there isn't one right answer.
Making a budget and sticking to it means you are going to have to find a way to keep track of your expenses. And for the sake of keeping the budget, you'll probably have to keep track of your spending daily, or weekly at the least.
It sounds obsessive, but until you trust yourself and your habits to pass by Starbucks when your food/coffee budget has run out for the month, you'll have to look at your budget almost daily. Before you make a purchase or head out the door, sneak a peek at the category from which you might be spending. This should help.
Here are a few other ideas for keeping track of your expenses:
The above tip applies if you are a rule-follower. But, if you know you like to break rules, even those you set for yourself, you might try using cash. You don't have to break your cash down into envelopes if you don't want to. It just makes it easier to keep track of. Again, these are all behavioral tactics to help you stick to your budget.
Be sure that you are extra honest with yourself here... You know you better than anyone, and you'll have to determine what will make the budget stick. It also might take some trial and error.
We use cash for only a few categories:
- Food: It's so easy to overspend in the food category. "We need to eat" is often confused with, "we need to eat out," or "we need to buy Ben & Jerry's" at the grocery store.
- Hair care: Since we leave a tip, it's easier to pay in cash for this one.
- Toiletries: Pretty easy to overspend here, too, so we limit ourselves by using cash.
- Date night: Typically means eating out or ordering in, so limiting this is wise for us as well.
Cash has it's limitations though, too. You can't buy things online with cash. Kelsey is pretty much the online shopping queen of the universe, so we don't carry cash except for the categories above.
We used to keep all of our receipts and come home and log them into our budget spreadsheet. Or, if we didn't get a receipt we would check our online banking when we got home.
It's kind of tough to keep track post-fact by looking at your online banking, unless you go back to the first section of this post and know how much you have budgeted ahead of time. If you just wing it, you will overspend for sure. (I know from experience.)
Enter technology. With the multitude of budgeting apps available and the percentage of adults with smart phones growing at a rapid pace, there's little excuse anymore for not finding the right tool for keeping track of your expenses.
I'll admit, trying out new apps for practical purposes is not my favorite thing to do, but if you are willing to give it a try, I'm sure you can find one that works for you.
I know a handful of readers use Mint.com (free option), and we use YNAB. We set our budget up at home before the month begins, and then the YNAB mobile app keeps us up to date everywhere we go via the cloud.
It's so nice not to have to worry about looking at our budget before we leave the house. We can just look at our budget when we see something we want to buy, and then make a decision based on what we have budgeted.
The other great part is logging the transaction as it happens. With this handy tool, we often have our budget updated before we leave the store. Here's a quick video that shows how we log a transaction using the YNAB mobile app.
So there you have it. A few thoughts on how keeping track of your expenses can help you stick to your budget. Find the right tool and you'll be well on your way to budgeting success.
How do you keep track of your expenses and everyday spending? What areas do you go over-budget the most?
First post in this series: Sticking to a Budget: Why?