Tracking Finances

by Mr. Cheap

Reader Jazzmin26 recently e-mailed me after reading my Mint review and shared my security concerns.  She asked for suggestions to “make my financial life simpler and not spent my weekends logging and tracking“.  I’ve repeatedly wrote about how valuable I find measurement to be, but I agree with Jazzmin26 that it can sometimes be tough to determine the best way to go about it.

Not as Hard as it Seems

In life we often make things seem harder than they really are.  Every year I agonize about my taxes, then they end up only taking me an hour or two and I’m happy to have a snapshot of my finances from the year before.  Similarly, logging and tracking isn’t something that will take up entire weekends.  I usually do a financial overview once a month (around the 1st) and I can capture all the info I need in 10 or 15 minutes.

Pen and Paper

I’m currently reading “Your Money or Your Life” and will post a review when I’ve finished it.  A large part of the book is spent detailing how to record your spending.  The authors suggest that the exact format isn’t as important as finding something that works for you.  Come up with a sheet with the numbers you find important, then printing it out (or make photocopies) and fill it in once a month.

I’ve recorded my spending this way, but carrying a small notepad and a pen in my pocket.  Every time I make a purchase, I pull it out and record it (on page per day).  If filling in the amount wasn’t convenient, I’d just get a receipt and put it into the notepad at the proper place (like a bookmark) and transcribe them at the end of the day.

Spreadsheet

I like to use spreadsheets (Excel or OpenOffice Calc) to keep permanent financial records.  I tend to agree with “Your Money or Your Life” that developing your own categories and measurements is probably the best way to go.  My spending tracking looks something like:

Food Travel Entertainment Necessities Gifts Total
May 4th $12.43 $2 $0 $0 $0 $14.43
May 5th $7.28 $0 $12 $6 $0 $25.28
May 6th
May 7th

How to categorize things (is alcohol food or entertainment?  if you buy a round of beers, is that a gift?) is entirely flexible.  If you eat out regularly, perhaps it is worthwhile to separate food into groceries and meals out.  I keep my fixed, constant expenses (like rent, internet charges, etc) separate and just track my variable spending with this.

When I was tracking my spending, I’d also maintain an average of each category (typically for the last 30 days) as well as the total and could view where my money was going and whether my spending was increasing or decreasing.

In terms of my finances overall, I also use a spreadsheet and track the various accounts like so:

Mortgage iTrade Checking account TFSA Cash Assets Networth
May 1st, 2010 -$87,012 $23,732 $1,201 $2,022 $3,223 $159,000 $98,943
April 1st, 2010 -$87,203 $21,157 $1,257 $2,014 $3,271 $159,000 $96,225
March 1st, 2010 -$87,345 $20,121 $1,072 $2,007 $3,079 $159,000 $94,855
February 1st, 2010 -$87,501 $21,353 $1,413 $2,000 $3,413 $159,000 $96,265

The Cash and Networth columns are calculated by summing the other columns (the checking account and the TFSA is the case of cash, all the columns in the case of the networth).  Again, this only takes me 10 or 15 minutes to figure out each month (spreadsheets can easily do all the calculations for you – you just look up each account and enter the numbers) and I can see immediately a snapshot of my financial health.

I don’t bother tracking credit cards, since I always pay them off in full, anything I owe to the credit card companies will be reflected in the amount of money in my checking account the next month so I don’t think it’s worth the time to do the extra look ups.  If I was carrying a balance on a credit card or a line of credit, I’d certainly track it monthly.

Networth IQ

A number of bloggers, including Meg at World of Wealth, track their finances on Networth IQ.  Much like a spreadsheet, it’s very fast and easy to update entries (just look up the account online and fill in the number).  The site automatically creates a graph showing your networth over time, and shows how each category has changed (as a percent) since the last month.

As much as this does contain a lot of your financial info, I don’t think it has the same security concerns as Mint, since you’re manually transcribing information to it (not giving the site your usernames and passwords to look things up).

How do you track your finances?

Be Sociable, Share!

Want to learn more about RESPs? Buy The Book:

Resp-Book

The RESP Book: The Simple Guide to Registered Education Savings Plans

Everything you need to know about RESPs.

See it on Amazon now

{ 13 comments… read them below or add one }

1 Future Money-Bags

I use Excel as well 🙂
But I do it a bit different than you, maybe just preferance or maybe because I only began late last year; Looks something like this.

Last month expenses: $$$
Rent/mortgage: $$
Food: $$ (Groceries, Eating out)
Alcohol: $$ (I track seperate to keep myself in line, its not a necessity)
Phone: $$ (Although its always the same, sometimes I go over :x)
Transportation: $$(Gas, Car insurance,Transit, Taxis, etc)
Entertainment: $$ (Things I spend on myself or others that I could go without..I can’t save everything)
Personal: $$
Business Expenses: $$
Total: $$$$$$$$$$$$$$$$$$ 🙁

Same goes for my Income. I track it all seperate (f/t job, business, tips, income tax refunds…maybe I shouldn’t count them, but I am getting them in return for work I did right?)

Than at the end of the month, I add in my total income, total expenses, total saved, savings %, net increase, yearly net increase, investment accounts.

Of course I pay off credit card in full every month, and never pay interest. I use CC for 99% of my spendings, cash for emergencies. Doing all this takes about 10-20mins a month (I do it halfway through month and at the end).
If anyone thinks 10, or even 20 minutes a month, is a lot of time to spend in order to keep track of 100% of my Finances is (no offense) crazy.

I can see how much I saved each month, how much I spent each month on every catagory. And since I use CC for everything, I can track back 18months of every item if I really want.

What do you think?

2 WealthManager

I track everything by using a combination of Quicken and Excel.

Quicken is great for consolidating all my accounts, downloads from my financial institutions save me a bunch of time, as do memorized transactions. All updates are done once/month and takes me around 1hr with the bulk of time being with manual entry of investment transactions (primarily all the distributions). Once it’s all here, I can slice and dice however I want with a good variety of reports: asset allocation, net worth, investment performance, spending trend analysis etc.

I use Excel to track RRSP, TFSA, RESP contributions/grants as well as ACB for tax reporting and asset allocation. With the latter two, I export from Quicken to Excel, add a few simple formulas and I’m done in no time. All of these updates take place annually/semi-annually.

3 Jacqueline

As I was coming up on retirement and knew I needed a good handle on my expenses (and knew I probably needed to curb my spending) I just started tracking again this last October, 2009. I was tracking manually at first, but I felt I was missing too many little purchases as my totals weren’t quite matching up to my bank.

Part of the reason I was doing it manually was the desire to use cash vs. credit cards (my cc got cloned last summer). But I missed the convenience of cc’s too much.

Here’s my most recent April post of how I summarize and what my categories are:
http://www.singlemomrichmom.com/2010/05/april-2010-tracking-update-and-thoughts.html

This month, I imported my bank transactions into an excel file and formatted them into a pivot table that shows the category, totals etc. Some time this month I’m going to do an online tutorial of how to do this for anyone that’s interested.

I’ve been tracking my expenses off and on since I was stony broke as a single parent in university back in my 20’s. If I spent $.10 on a cup of hot water (didn’t have enough to buy a cup of coffee), I wrote it down. But back then, $.10 was probably 1% of my budget for “eating out” for the month. 🙂

Doing the exercise, even if periodically, say one month per quarter, is a great learning exercise. Even better is going the extra step in YMOYL and assessing how your expenses reflect your values and changing them with the knowledge you acquire. (For example, I learned that I’m not going to be spending a whole lot of money on travel this year in retirement because I don’t really value it.) This level of consciousness is necessary to live a happier life I think, retired or not.

4 Brian

NetworthIQ is great for tracking networth. I don’t track daily expenses, it’s much too tedious.

5 Mr. Cheap

FMB: I love it!

WM: I should have probably mentioned Quicken (or some program that does what Mint does but resides on your home computer). Thanks for mentioning it!

J: Thanks for the link to a your related post. I agree that “assessing how your expenses reflect your values” is a great part of YMOYL (it will definitely feature prominently in my review)

Brian: Truth be told, I don’t track my daily expenses either (you’re right, it is tedious). As J says, it *CAN* be a good thing to do occasionally, even if you can’t stand the thought of doing it all the time…

6 Jazzmin26

Thanks much, Mr. Cheap, and everyone else for your contributions. I thoroughly enjoyed reading them all. I love this topic.

I manage our corporate and personal finances, in addition to my “day job”, and spend most of my weekends logging and tracking. I enjoy it, but I admit to being compulsive and using it as an excuse to keep myself fairly isolated; I lack in the “play/having fun” department, but I’m working on that. Bottom line is, I’m most comfortable “working” and would rather do that than anything else. Ouch”! I gotta get a life.

In the meantime, my husband, who has no problem having fun, rides his motorcyle on the weekends in a group, has no interest in finance, and has gotten into the habit lately of spending money on high ticket items.

I was living in “terminal vagueness” where finances were concerned for awhile. I, too, was spending blindly and accumulating debt. It has only been since December 2009 that I have gotten back on track.

I’m using Excel exclusively right now. I joined Mint.com last week, happened upon “Four Pillars” and Mr. Cheap’s review from 2009, and closed my account that same day.

Quicken and Networth IQ sound good; I will definitely check both of them out. I look forward to reading Mr. Cheap’s review of the book he’s reading and taking a look at Jacqueline’s online tutorial when it’s completed.

I could say so much more. I just deleted half of this post after re-reading it. I’ll keep it down to a reasonable length for now and try to stay on topic. I look forward to getting to know all of you better and exchanging thoughts and ideas on personal finance.

Sincerely,

Jazzmin26

7 Melissa

Hi everyone, excel seems quite popular. I now use excel exclusively. I track all of my savings and expenses on a bi-weekly basis to coincide with my pay periods. I track investments monthly and my net worth quarterly. One nice feature I like is linking cells within multiple excel tabs. It was a fair bit of work to set it up at first and extra time for fine tuning but I now have a system that’s been running smoothly for years.

8 Future Money-Bags

@Melissa
I am brand new to Excel still, and I have to look up everything and tweak everything to make it better all the time. I have been trying to figure out how to link cells from different excel tabs.. would be a lot neater.

9 Sensei

I have been using Excel for quite a while now and find it is probably the easiest way to track my expenses. It is easy to create, and easy to track. What I do every few months is pull all my spreadsheets together and examine the monthly differences and see what I could possibly do to decrease my spending and save more.

10 bob

I really, really like YNAB. Not only does it have a great interface, but it is cheap like borsht and it provides great tracking, charting tools.

They also have a nice forum with some good tips & tricks.

http://www.moneysmartsblog.com/ynab-review-you-need-budget

11 Financial Cents

Excel is the way to go. We combine both fixed expenses and variable expenses and subtract this from our income to monitor cashflow in our budget. My wife and I review our cashflow regularly (at least every other week) to see where we’re spending (or saving) our money. We use credit cards for almost every expense, so it’s easy to see where our money is going.

Our expense sheet is broken down into categories, a few of our fixed costs are:
-mortgage payments
-property taxes
-Rogers bill
-Enbridge bill
-Hydro bill
-home and auto insurance payments
-RRSP contributions
-fixed contributions to savings

A few of our variable expenses are:
-groceries
-alcohol
-cell phones
-entertainment
-gas/transportation
-clothes/personal

Anything left over is devoted to mortgage pay downs or general savings. Seems to work pretty well for us! Excel is a great way to track your net worth as well, using your liabilities against your investments.

12 Len Penzo

I’ve been using Excel to track my expenses since 1998. Absolutely love it!

I’ve got over 25 individual categories. You can never have enough of them though and so several times a year I’ll get a phone call from the Honeybee when I’m at work where she asks something like “Hey, Len, is that $200 wall hanging we bought considered ‘Home Improvement’ or should I put it under something like ‘Entertainment?’ ”

Of course, my rule of thumb is “when in doubt, file it under ‘Other’!” 🙂

All the best,

Len
Len Penzo dot Com

13 Jassmin26

Thanks for you all your great comments, guys!

Melissa, I would like to hear more about your system. I don’t track investments or net worth yet, but that it something I would definitely like to start doing. I think I know what you mean about linking cells within multiple excel tabs, but I’m not quite sure. Please post more details on this site or send me an e-mail if you’re comfortable with that (jassmin26@gmail.com).

With all the new technology out there, I’m quite surprised to find so many people, like myself, who use Excel exclusively. In my case, it’s because I’m not too real familiar with anything else. 🙂

Sincerely,

Jassmin26

Leave a Comment

Previous post:

Next post: