How to track your expenses

Why tracking rarely survives into a second month

The usual story goes like this: the first week everything is written down to the penny, the second week every other day, and by the third the sheet is empty. The reason is almost always the same — the daily cost is higher than the benefit. Twenty entries a day in a spreadsheet are twenty small decisions, and every one of them can be put off.

So the question “how do I track my expenses” is really a different one: how cheap can you make it in daily effort, so that it survives a bad week. Precision paid for with effort almost always loses to a rough figure that holds for months.

Three ways, and what they cost in time

• Record by hand — a spreadsheet or an app. The most accurate and the most expensive: roughly 3–5 minutes a day. It makes sense for the first two or three months, while you still do not know your own habits.
• Go through a statement once a week. You write nothing down day to day, and once a week you import the statement from your bank and sort the transactions into categories. Roughly 15 minutes a week, and the card forgets nothing on your behalf.
• Combine the two: card spending from the statement, cash and odds and ends by hand. In practice this is the most durable option, because the manual work left over is exactly what the bank cannot see.

What to record and what to skip

You need as many categories as you are prepared to make decisions about. “Groceries” is a useful category, because you can act on it. “The supermarket on the corner” is not — that is a place, not a decision. If a category never changes your behaviour, it only makes the report longer.

Start with seven or eight: housing, groceries, transport, cafés, health, subscriptions, clothes, other. If “other” has swollen after a month, split that one — not the rest.

How to make the habit invisible

1. 1Attach the entry to something you already do: you paid, so you write it down while you are putting the card away. Not “I will remember this evening” — you will not.
2. 2Cut the action itself down to a few seconds. In FinLad an expense can be written as one line — “coffee 85” — and the app works out the amount, the date and the category itself; or photograph the receipt, and the fields fill in from the photo.
3. 3Once a week, spend fifteen minutes reviewing rather than entering. This is where tracking starts to pay back: you can see where the money went, and how much of that you never noticed.
4. 4Do not catch up on what you missed. A week without entries is simply a week without entries; trying to reconstruct it from memory is the most common reason people quit for good.