Friday, July 31, 2009

Tracking spending

I had a conversation about tracking spending the other day. Miss Jones was complaining about how hard tracking spending is--she can stick to it for a week, maybe two weeks, but then something happens and it completely falls apart. She's tried doing it by hand and on the computer, using spreadsheets and money tracking software. She uses mostly credit/debit cards instead of cash, so in theory it should be easy to reconcile receipts or categorize where her money goes. This is not a woman who lacks willpower either--she's smart as a whip and making As in law school (which she's attending on a full scholarship!). I think she finds financial issues, especially tracking spending, boring. And it might be a bit of perfectionism too--if she loses track once, why bother to keep going?
I think that tracking spending is helpful mainly because of the Hawthorne Effect--simply paying attention to where your money is going helps rein it in. That's all well and good to say, though, and harder to implement. My suggestions were just to do it, every evening, and if she missed a day, to do it the next day anyway--even if she left stuff out, even if stuff was missed. After a while it becomes second nature and easier to keep track of. But I've been tracking every dollar for five years or so now--maybe I'm not remembering how I got started.
Do you have any other suggestions?

1 comment:

  1. She'd definitely need to get past the need to do it perfectly or not at all: that's a huge barrier to getting started or keeping going. You're going to miss a day or two, just plan to go back and fill them in.

    Also, maybe she needs to work on a more fluid system that works for her, clearly the way she's been doing it isn't a natural fit for her lifestyle if a little hiccup or bump can make it fall apart completely.

    Lately, because I've been so on the go, I've just tracked expenses on my phone in the notes section. Simple as pulling out the phone when I put away my wallet, opening up the note, typing in the amount, form of payment, and merchant or item. I just add each day's date as I go along and voila, I've got my spending tracked for my whole trip by the time I get home.

    That's not at all how I used to track it: I was a pen and paper (planner) girl up through last month. Of course, I also keep accountability via the blog, but that's just another tool.

    Maybe she could use a budget buddy? Someone to bounce ideas off of and to check in with until she's got a system down.

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