Welcome to Day 16 of Where’s My Money Going? Month! This February 2009, I’m challenging readers (and myself) to track spending manually for 28 days. Don’t worry if you’re late to the party, just keep tracking your spending into March.
Today, we’ve got a guest post from Steve in Montreal who shares his money-tracking method and the results of 18 months of tracking:
I decided to track my spending about 18 months ago after wondering where all my money was going. I had tried a store bought financial program and found I could not customize it and didn’t use most of the things it could do, so I decided to keep it simple and use only MS Word and Excel.
In Word you can download a blank monthly calendar. At the beginning of every month I fill in my known expenses in the day when they will come out of my bank account (I use automatic bill payment). I place that month’s sheet on the fridge in plain sight. Each time I do anything that requires a transaction (groceries, gasoline, write a cheque, etc), I write down what I spent directly on the calendar corresponding to that day. I always ask for a receipt when I purchase something and keep them in a file folder until the end of the month.
At the end of the month, I spend about 20 minutes reviewing what I have spent using the now filled in calendar and receipts. Using Excel, I make 3 columns on a worksheet for what I call the Big 3: Groceries, Gas & Stuff. I then enter the items in the column under their corresponding heading. Groceries and gas are straight forward.
Stuff is anything besides fixed expenses, groceries and gas. I total each column and make a grand total of the 3. By dividing the individual column total by the grand total then multiplying by 100 you can get the percentage spent that month for that column. After doing that, you really come to realized how much was spent on stuff.
So where is all the money going? By further subdividing the items listed in the “Stuff” column, it is easy to separate things like medical expenses, car & house repairs, gifts, etc. You can even spot those that are vices (fast food, alcohol, lottery tickets, etc). You can then calculate a percentage of each “Stuff” sub-column in the same manner as described earlier.
The next month is similar as the previous one, new calendar page, empty file folder for receipts and new Excel columns. I like to keep all columns side by side on the same sheet and have the name of the month right above. This way I can track from month to month. At the end of 12 months you can readily calculate a final total for the year. These numbers can be a real eye-opener for some.
I recently went over my 2008 spending and was amazed at the progress. Seeing how much I spent in percentages really hit home. I like this system as it doesn’t take up a lot of time and can be stored on the computer. It soon becomes routine and ultimately clarifies where all the money is going.
This post was part of Where’s My Money Going? Month. Tomorrow I’ll be doing a financial software giveaway!