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This is not criticism, it’s an inquiry.
Over the years I have read many times on HD about tracking expenses/spending. Some people pursue this in great detail, some seem to approach it like a hobby. There may be something motivating in knowing how every penny is spent.
As you may suspect, I don’t know in detail where or how we spend our money. As long as the big picture is in balance I am happy.
What I do know is the bank balance is $X at the end of the month, then on the first of the month a pension deposit is made and on the 2nd and 4th Wednesdays Social Security arrives. At the end of the following month there is a new balance. The difference is what we spent which includes 529 contributions and paying off any credit card balances.
So, $1,000 end of month bank balance-income added, say $5,000-end of following month $500 balance. We spent or saved $5,500.
What more do I need to know? Now, if the month end balance had declined as in the example, especially more than once, I want to know what atypical spending occurred and why.
However, the more likely result is the bank balance increased modestly as we rarely spend all income. If that occurs too often, more is transferred to our emergency fund, which is how we paid for a new water heater (hint Jonathan).
While my income is a pension, a planned income from any source is the same.
Satisfy my curiosity. If you are a detail person, why do you track in detail what you spend?
I asked an AI service why people track expenses and here is what it said. Honestly I don’t see how detailed tracking is necessary for any of these goals.
Richard:
Every January (believe it or not on an index card) I list my monthly expenses. Included among the approx 15 items are an emergency fund, new car fund & a combo fund for home & car repairs,vacation & Christmas spending…..these are kind of similar to escrow accounts. I then use a spending tracker to make sure that all expenses remain reasonably in line. If my monthly food budget is $800 I’ll know how well I kept to the budget. Dining out is $200 per month, etc. I’ve been doing it so long it takes just minutes of my time each month. The spending tracker I use breaks down each expense to a percentage of my monthly income-HOA fees = 30% and so on.
Just gives me piece of mind and takes very little time once you have a system established.
The important thing is it gives you piece of mind and therefore it can only be the right thing for you to do. As you know, I too use different funds for different purposes, but just watch the totals.
What do you do if say the food budget runs over in a month?
Richard:
First thing I do is get on the scale to make sure I haven’t put on a few pounds!
The food budget is derived from obtaining my previous years total food expense (easily obtained from the app I use) and dividing that amount by 12. Slight deviations over or under are normal. I’ve never had a huge discrepancy that would cause me to increase (or decrease) the monthly amount. If needed, I could up the monthly food budget and decrease the monthly surplus amount.
“In order to know where you are going, it’s first helpful to know where you’ve been…”
Back in the mid-90s, when my wife and I were struggling with the financials around whether she could afford to leave the workforce after the birth of our first child, the exercise of building out all our expenses by category in Quicken was absolutely critical to helping us make that decision . A twelve month “look-back” of what we spent (and where we spent it – by specific category) helped us come to some common ground as a couple on whether “needs” in our purchasing were actually “wants” or merely just “wishes”. She did end up leaving the workforce while raising our children…and I’ve been a die-hard Quicken user ever since, primarily for this reason.
As we now approach the possibility of an early retirement, Quicken reports on our expenses are extremely helpful in helping us identify what is a reasonable annual retirement spending target in our planning. I’m sorry, but some arbitrary “rule of thumb” (e.g. “plan to live on 75% of your pre-retirement income”) is way too vague for my comfort. The details matter.
There is comfort in being able to do year-over-year comparisons of expenses, particularly since we are both self-employed. Quicken does that for us. Our CPA also thanks us at tax time and gives us a nice discount on his preparation rate based on the robust tax reports that Quicken runs in mere seconds for us.
In short – I’m not a budgeter, I’m a tracker.
Please don’t take this the wrong way, I’m not criticizing, just asking.
You know your net total income after taxes, you know your total savings and thus you know what you spend.
As you prepare for retirement you do need to know significant changes in your future spending. no mortgage, extra money for travel, etc. What goes away, what is added?
Assuming your saving goes away, don’t you now have a good idea of income needs going forward?
So, you know the amount you were living on, and you know major changes in retirement and you now have a good idea of future income needs. To my way of thinking anyway.
If you are a regular reader of HD, you may know my view on income replacement so I won’t go there, but it sure isn’t in the 70% range. Plus consider future inflation.
Hmm, haven’t read the foregoing comments but this strikes me as another RDQ thread where because he personally hasn’t needed to do something he underappreciates the benefit for others.
We’re not all wired the same, some have natural and intuitive inclination toward frugality and financial discipline and are lucky enough to secure a life partner with the same attitudes. Others find finance difficult, struggle with distinguishing wants from needs or overspend in search of social validation, self reward or to overcome some trauma in their past.
Obviously if you’re fortunate enough to be awash with surplus income and you don’t have any major vices or ruinous habits, tracking and budgeting is a lower order concern. I don’t do it in any great detail while I’m working. But I plan to do it more when retired, not least as a way of identifying areas where I can really benefit from less frugality so as not to die like a King Tut.
For many though tracking is the first step on a financial journey towards being in control of their future. It would be unwise for anyone to say it’s not a good idea for that reason alone.
“RDQ … decries the benefit for others”
RDQ says he just wants to know why others see things differently than he does, although I don’t think I’ve seen him explain why he wants to know why. I’m guessing it’s just the way his mind works.
The tone problem comes when his follow-up comments sound more like pushback, and not in just an occasional post but frequently. Since tone is difficult to discern in written posts, it can be challenging for us readers.
Sorry I swiftly edited “decries” because it was unfair.
I do struggle somewhat with the “why”. Surely Mr Quinn in the course of his professional life must have seen more than most of us the spectrum of people who were good with money to careless, reckless, hopeless or just plain indifferent? And for many in the latter categories tracking and triaging expenses is usually 101 in any makeover plans.
I want to know, I’m curious. I’m testing my own assumptions and methods to see what I may have missed. I also like simplicity in methods and am curious when people need detail because I don’t understand it.
Our spending is in my head. If we need or want to buy something I know where (which account) the money will come from. I track money by account balance, not by item on which it was spent.
Our six accounts each have a purpose. For example, every month a set amount is transferred into an account labeled fixed expenses. From experience I know that covers all costs for two homes. Utilities, taxes, insurance, cable, internet, landscape services. Nothing else ever comes from that account. It does always have a reserve balance. If the balance starts to decline I know the transfer amount is not enough so I adjust.
I know what is deposited in the bank during the month, by default that is the budget, that limits spending since we never have a credit balance. I’m curious why I would need to know more about our spending. That’s really all there is to it.
Hi Richard,
I hope you and your family are doing well.
Whenever I stop by HD, I look for your comments first, as I find them the most helpful. You consistently share logical, practical, easy-to-understand, and easy-to-follow thoughts, with a dry-humor twist. I can’t figure out why, at times, others get their feathers ruffled. Perhaps it’s just the way different people are made. I have degrees in mathematics (primary field of study being probability theory and statistical analysis) so your math-like, logical approach intuitively appeals to me. Maybe Richard is from Mars.
Long punching bags and lightning rods.
Thanks. 👍 Sometimes I feel beaten up. I see nothing wrong with challenging ideas and assumptions, but sometimes others don’t see it that way and feel I am telling them what they should do. That’s never the case, but triggering questions seems reasonable to me. I appreciate being challenged.
I think we’ve covered it before but your having separate accounts for different costs and checking statements every day is just an alternate form of budgeting and tracking, but one you don’t recognise because of your aversion to the terms. There are people who are way more relaxed than you about daily tracking who would still consider themselves as living within a budget.
Yes, clearly it is a method to manage money, to know how much we have available from our income, but that’s it.
There is no budget other than the limits auto generated by available net income which is my point for everyone-what one has to spend is their budget.
Carrying credit card debt after month end is over budget living for example.
While we use six accounts, three are monitored, two checking accounts and the fixed bill account. the others are saving, one for the purpose of travel, budget by default I guess.
Doesn’t it all boil down to down to living within means, to minimizing financial stress? I just think simple is better. All I see as necessary are the beginning and end of the month balances. During month balances are easily accessible online or at the ATM. Let the bank keep track.
A thought experiment. Say you’d died suddenly when your kids were young and there was some problem with life insurance paying out. Would your wife not have had to get rather immediately on top of what expenses the new household had in order to make a plan around generating sufficient income? And even with a life insurance payout need to budget how to draw on that appropriately.
Spending within your income only works when you have sufficient income. Some people will never have surplus income because each month is a balancing act with essential costs, others despite high incomes will be used to a lifestyle where cash flow works but they increase net debt because they don’t plan for the income turning off. You can probably bet the former know more exactly what their expenses are compared to the latter even though a bit of expense tracking could probably identify opportunities to reduce debt.
Your example is impossible to answer, but certainly life for her and the children would be very different. Looking back even though she would have received my pension such as it was then, I did not carry adequate life insurance.
You say, “Spending within your income only works when you have sufficient income.” I see that as a fallacy, a trap many people fall into.
Spending as you desire, spending up to the lifestyle you want is limited, but spending within your income is an absolute.
For the poor that may include forms of subsidies just for basics, but for most it means you do without what you desire because your income is limiting.
my parents always lived P to P and in retirement on SS alone and not the maximum. They spent within their income and never even had a credit card. It’s was not the way you or I would like to live, but they survived. My mother controlled the spending.
Clearly I meant spending within your income as the only thing you need to worry about. I bet your mother tracked expenses – how else could
she know what was left to spend and accrue for what was anticipated before the next paycheck? That’s what controlling spending means for the great unwashed. Not having a large amount in each of several pots and never exhausting it in a month.
The latter is fine when you’re awash with wealth but it isn’t the reality for most people when it comes to being in control of their finances.
So why do people track expenses? Because it’s the way they ensure they satisfy the Micawber rule.
Your inquiry is obviously written from the perspective of a person living well within their means. There was a time in my life where I needed to know exactly where we stood on a daily basis.
After my wife and I were married and I was starting out in my career, we let tracking spending fall through the cracks. As a result, we became late on some payments and bounced a couple of checks. I was embarrassed and frightened by the fact that I was clueless about where we were financially.
As a result, I began to track with great detail what came in and what went out on a daily basis. Originally, I used the check register and a notebook. Later, I found some software that allowed me to do things electronically. As I gained more experience with the software, I was able to use it to track spending trends, plan for future expenses, and track our net worth.
We were blessed to be able to put 4 children through college, save for our retirement, and eliminate our mortgage long before I stopped working. The need to have “to the penny” accuracy on a daily basis waned over the years, but the habit of checking and recording has stayed with me. Maybe after a few more years in retirement I will stop tracking is such detail, but I doubt it. It has just become a comfortable part of my routine.
When you say tracking spending fell through the cracks, does that mean you really didn’t know you were spending more than your net income? Were you charging things back then?
other than the comfort it gives you, do you learn anything that changes your habits by tracking in detail in retirement?
We paid most bills by check back then. As I recall, we only had one credit card and didn’t use it very much.
We both had checkbooks and I was not careful at reconciling when the statement came in. Hence the bounced checks.
I seldom get surprised at what I see in the details, but I do create reports that help me make decisions. For instance, a couple of years ago, I created a report on how much we were spending on cable tv and I was able to compare that to what we would spend if we went to a streaming service. We saved over $100 a month by dropping cable. (Of course inflation and the addition of other streaming platforms has pretty much erased that savings. LOL)
I do a categorization of my cash flow (banks, credit cards, etc.) once a month. I also question the necessity of this as my spending is pretty stable year over year and I don’t spend excessively. I keep doing it for random questions that come up from time to time and the data is there for me to look things up. A potential downside of tracking expenses is that doing so may actually result in spending too little. Looking at variances, comparing with prior month or prior year, etc. may make one too spend conscious.
I track my expenses down to the transaction. Takes anywhere from 3 to 7 minutes a day (sometimes the downloads are slow). So it’s a negligible amount of effort.
I prefer the cash flow graph to the budget graph in Empower.
It also is the single best security you can do for your accounts. The easiest way to deal with an attack on your accounts is to see it happening and step in to stop it. (Happened to me, attack on my checking account, fake Amazon transactions, good enough to not trigger the banks fraud detection)
I could cut it back to once a week, but I look forward to my morning coffee, news and the daily update. I would not recommend it for someone that could get riled up about the daily gyrations.
Keeping track of your accounts is not the same as tracking and recording every penny spent IMO.
I have been subject to fraud several times. Each time my bank or credit card alerted me. Once it was $25,000 charged for industrial equipment. Once someone attempting to use my debit card number at a McDonalds another state, I thought that was amazing since they didn’t the card.
I look at my bank accounts nearly every day, same with all investment accounts, but I don’t track or record anything. Each time a credit card or debit card is used, I receive a text within seconds.
For me the apps do all the recording and tracking. If you’re asking me if I fret the amounts every month, no I don’t. I’m more tuned in to the regularity.
As for fraud, I’m least concerned about credit cards, they tend to have excellent protection layers. (We had a nasty little incident where my wife’s card number was stolen and farmed out to organized crime in Asia, but it didn’t cost us a penny)
My biggest concern is when they try to transfer an entire account. At Schwab for example the alerts are not for a transfer initiated outside of Schwab. If you’re interested in the scam I can post a link from The Finance Buff. Fidelity has the account lockdown, that protects my accounts there.
And I’m not particularly paranoid but lately it feels like the banks and brokers are playing more catch up than trying to get ahead of the crooks.
As you have written, both today and in the past, you have done fine without a budget or keeping detailed records of expenses and spending. To answer the question you posed in the title, yes there is real value to tracking expenses and spending, in my opinion. Just how much value depends on whom you ask. I note many others concur with you on this topic.
I have observed in some of your responses to comments on your articles, you acknowledge different strokes for different folks, but express difficulty understanding why someone made certain choices. I think, often, the reason is we proportionately value the various tradeoffs resulting from our decisions differently.
When someone else looks at the same data as I, but chooses a different action, aside from the possibility that one of us is better informed on the subject, I chalk it up it to the fact that we are all wired differently. And maybe that is why some compulsively plan and track their spending, not out of necessity, but because they value the information.
Well said, @jack hannam.
I think you are right. But I’m always trying to understand behavior. You should see me on Facebook😀
Knowing the incoming and outgoing of your money will better prepare for what ifs.
Ala what if DJT makes a 30% cut to your Social Security? What will you cut to accommodate that change? I have a spreadsheet and run different scenarios to cut 30%.
I agree you should know that, but it is easy to do on a macro basis. For example , I know exactly where our SS goes and what a cut would mean.
Dick, as one of the resident spreadsheet junkies, I feel I should chime in. I tracked all of our expenditures to the dollar in a single Excel spreadsheet for 6 years, from 2017 to 2022, miscellaneous cash (not much) excluded. I binned everything into one of about 25 different categories. We don’t budget, so this exercise gave me insight into what we were spending our money on.
Why did I do it? 1) I’m a bit OCD and I like spreadsheets, 2) It gave me a general idea of where our money is being spent.
You’ll notice I no longer do this. The entertainment value of the activity declined for me over the years, so I stopped. I still track several categories where the data are very easily compiled.
Dare I say it, in retirement I’ve moved a bit closer to Quinn’s practice.
Ken, resist the dark side of the Force. There’s nothing wrong with being rational, analytical, and competent.
🙂
Well, Ken it’s nice to hear there is even hope for an engineer.
My husband and I just completed our spreadsheet tracker for February. It took 10 minutes and reminded me what our other reasons are for doing this beyond the obvious, which I mentioned in an earlier post.
When we got married 9 years ago, my husband wanted to be the one to take over paying the bills and his method was different from how I had been managing my finances for years. Filling out the spreadsheet together gave and continues to give us the opportunity to ensure that we are both equally aware of where our money is going and talk about anything that might be out of the ordinary in either our expenses or income. This has uncovered some differences in perspective in the past which has led to some lively and enlightening conversations!
We also list each credit card separately and only record the monthly total for each without capturing the specific purchases. This helps in 2 ways. About 85% of the credit card balances are from discretionary spending and therefore could be reduced if necessary. And the second reason is that we can be sure that we are being smart about getting the points and benefits we want from each card by shifting which one is primary in any given year.
The process also gives us the ability to compare year to year to see the overall variations in income and spends. Which has helped us determine when and how much we need to begin to withdraw small amounts from investments to fund our travel goals.
I get that this process is not everyone’s cup of tea, but it works for us. And in my opinion, the wonderful thing about HD is the sharing of different ideas, knowledge and perspectives in the hope that in doing so, someone might find something useful for themselves. Or at least something interesting.
— Jan
“Filling out the spreadsheet together gave and continues to give us the opportunity to ensure that we are both equally aware of where our money is going and talk about anything that might be out of the ordinary in either our expenses or income. This has uncovered some differences in perspective in the past which has led to some lively and enlightening conversations!”
My partner and I do this every month, as well! We have one spreadsheet for our net worth and one for tracking our expenses; at the end of the month we review them over a cup of coffee. These chats help make sure we are on the same page and have sparked some wonderful conversations about priorities for spending in the future.
I do track our expenses by category, and have done for years. Initially, it was helpful in making sure our spending was aligned with our priorities. We’ve got that pretty dialed in at this point, so it’s not really necessary, but I’m scientist and long-term data sets are the sea I swim in!
Thank you for your comment, Cecelia. We are of like minds again. 🙂
I like the idea of tracking together to force a less interested party to at least see how to access accounts and what’s in them.
I appreciate your post. I don’t understand it, but what works for you, works and that all that matters.
In these days of lousy products, increasing prices, and trying to get the best value for your $$, for those who don’t keep detailed records, how do you deal with:
Having a good handle for your finances on a macro level is wonderful. Without details though, someday you will note at the end of the month that your extra cash balance doesn’t seem to be as much as it used to be. But, you won’t have the data to know why.
For many, the discipline of keeping detailed records helped them accumulate the funds to invest and produce the wealth they now enjoy.
“For many, the discipline of keeping detailed records help them accumulate the funds to invest and produce the wealth they now enjoy” BINGO! That was me for a good 20 years and I’m convinced it helped me to accomplish my wealth. Now I’m just trying to enjoy and share my wealth and overcome my frugal tendencies…. I don’t keep track of anything, I don’t even balance my checkbook.
Thank you for taking time to comment. Here is my view:
If we get to the end of the month with less than normal cash balance we know exactly why, we spent more than usual. More specific, I monitor the checking account balance and always know what is available to spend that month.
if we need to know about specific spending I just go online and look at the bank accounts or credit cards. Any cash we spend comes from ATM withdrawals.
I think because you live in a low cost housing area, you cannot appreciate the challenge of long term home ownership on the West Coast.
I have owned 3 homes over the last 51 years. The first two were in Fremont, CA. The third in the PNW. The first home I bought for $29k in 1973. It was a little 1200SF rambler/ranch. That house is now worth $1.4M. I sold it in 1978 for $62K and bought another 2 blocks away for $68K. This 1500SF home is now worth $1.6M. I sold it for $92K at the end of 1979. My third home that I now live in cost $99K when we moved in January of 1980. It is a 2500SF house which is now worth $1.1M.
Because you used to be able to transfer the gain on your old home to the new one postponing the capital gain, my basis in the WA house is about $62k, leaving me with a potential high 6 figure capital gain much in excess of the $500k exclusion.
My replacement toaster over was delivered last Thursday.
I am one of those who track everything, the results of being a CPA for 40 years. We only have 1 joint checking account and 2 credit cards, both cash back. I use Quickbooks, and reconcile all my accounts monthly. I have never budgeted because we never spend all of our monthly cash inflows. We are frugal, but buy when we need to. Mortgages were paid off decades ago, and we paid cash for our last car purchase. I track because it is a sick habit I have, and I enjoy doing it!
I prefer to avoid surprises, so tracking my finances is helpful. Fraud is a constant threat.
One aspect of this is determining if we are living within our means and if our savings goals are being met. No one can know or predict with absolute certainty the future. However, some tools do help to prepare for it.
Since about 1990 I’ve used several tools, and relied upon Quicken since about 1995. This has put all of my accounts into a very viewable and accessible electronic “file cabinet”. I’ve got the equivalent of a folder for each credit card, savings or checking account and investment account.
Much of the information is imported automatically, but I do review each account frequently and I do compare statements each month.
So far, I’ve avoided most Suprises. There are other benefits, but one is the budget tools. A long time ago I used a columnar pad, then progressed to adding an electronic calculator. In 1984 I began using spread sheets. It was labor intensive. I had access to a variety of software including the defunct Microsoft Money and to Quicken. Over time I became far more reliant upon Quicken.
Today I spend very little time dealing with these matters. It is more about avoiding those “surprises”. My spouse uses Quicken reports to look over my shoulder and to loosely monitor her savings and investment/retirement accounts. While vigilance is a requirement, there have been no “white knuckle” experiences, even during some significant bear market declines.
In the first year of my cancer treatment, I had very little time or inclination for financial matters. Using Quicken made this far easier and I don’t think I even glanced at a brokerage statement. When it became apparent it was no longer safe or convenient for me to live in our large Recreational Vehicle (RV) even with 1-1/2 baths, etc. we decided we needed to make a significant shift. We lived in an American Disabilities Act (ADA) compliant hotel for a month while looking for a more suitable living space. Initially, I was concerned about the numbers. But I ran a few Quicken reports and told my spouse “I guess this is why we have been saving”. We purchased a suitable ranch style manufactured home and sold that RV and the site it was on. One of our friends told us “You are really brave to do this”. In fact, it was far easier than it might have been. I pulled some funds from savings and from a Roth-IRA. Our income tax consequences were low (12% bracket) and we avoided debt. With knowledge comes power, it is said.
Quicken includes a sophisticated “Lifetime Planner” and in conjunction with other online tools we’ve become, over the years, increasingly comfortable and confident of our personal financial plan.
Norm
I have been using Quicken for almost 30 years. I make memo notes on some transactions. My spouse and I refer to it as the family diary and use it to answer questions such as: “Where (or when) did we buy that appliance”, “In what year did we go to….”, “Have we given to…..”? Very easy to search. Also useful when making long term plans. Yes, I could do it with a spreadsheet, but I have deleted enough rows/columns and messed up enough formulas in my time that I very much appreciate all of Quicken’s hardwired features!
We have been blessed that we have never had to budget or do detailed expense tracking. Like you, we generally underspend each month unless there is an extraordinary item like a major repair. We both have enough discipline not to go crazy in buying things.
A couple of times in retirement, I created a detailed spreadsheet of our spending for the year. I broke things into categories. It took a fair amount of time and was helpful in knowing what our spending picture is. But it never changed anything.
I do scan our checking and CC accounts each month. Very rarely have I ever found anything questionable. If we have major bills or spending needs, I make sure we have adequate funds in our checking account. We have all monthly bills and SS/pension deposits automated.
I look at everything that goes on the credit card per the issuer to check for fraud purchases.
I also compare each month’s total expenses to our monthly net income.
I don’t care about which category expenses fall into.
I say to each his own. Some people are detail oriented, whereas I, like you Richard am a big picture person.
Our accounting goes like this. We pay about 90% of our monthly expenses on our credit card (only significant other expense is about 8K annual for real estate taxes). When the statement is posted my wife reviews the charges for errors. I then check the bank account balances and the transfer enough to pay the bill off and have a rough balance of 2K in our credit union (the rest of our cash reserves are in Vanguard’s Federal Money Market account as it is paying @4% vs< 1% at the credit union).
So far this year expenses since we are mostly home caring for my 103 yo mother in law is $5,500.
Since we are living off of our retirement accounts I do a quarterly net worth calculation (subtract cars and house values) to make sure we our overall financial position is solid. We have been retired since 2019/2020 and despite buying 2 new (final?) vehicles and significant travel until last year our investment portfolio balance has barely budged.
So I am chill.
We track income & expenses on Quicken each month and balance check book and record & categorize credit card charges as part of the process.
is the income & expense tracking process worth the time & energy spent on it? Probably not since we do not really do much with the information, but we continue to do it partly or largely out of habit.
Despite using spreadsheets for financial plans, I’ve never used any software for tracking expenses. I have long relied instead on a (quite literal) back-of-the-envelope approach to budgeting. Included is a rather large “misc” category to get me through times of tight cashflow. Now, in my 60s, I’ve expanded this to include computer-printed tables of monthly bills. Completing the tables in ink, with dates and amounts paid, is not at all about tracking expenses. Rather, it is my way of developing a routine that I hope is a safeguard against future forgetfulness.
Some people do it for these reasons:
For others it’s just who they are – think of it like an OCD of sorts. I like everything neat and tidy: everything in its right place.
Sal, I love that final sentence.
I’m sure you are right.
I have been using quicken for decades and I find it the most useful financial program ever. I really do not keep track of detailed expense categories anymore. I lump them into a “2025 spending” category for example for all 2025 expenses. What I do with quicken is keep track of my financial and investment accounts in detail since all the transactions get downloaded and then I reconcile to the actual balances. As I said it’s a miracle program worth the $100 a year for the premier quicken version.
I guess it’s the fact that I’m an engineer/computer geek that I’ve used personal finance software since the MS-DOS days. Starting with Managing your Money by Andrew Tobias, to Microsoft Money to Quicken. One reason was doing away with balancing the checkbook every month (dating myself) – less tedious with the software. It probably takes me 2-3 hours per month to enter in credit card receipts, checks, any brokerage/IRA changes and reconcile statements. Benefits to me: See changes year to year (expenses, income, savings growth, net worth, etc.), being able to run a year-end reports for charitable contributions/medical expenses/etc for tax purposes and now that I’m retiring this year helping with establishing an initial retirement budget.
Quicken keeps track for me. Between the monthly fee for my retirement community, my taxes, and medical insurance, there isn’t much I can do about major expenditures. Should the draw on my portfolio, currently under 1%, approach 4%, I might start to worry. Meanwhile, the Quicken records came in handy when I had a fee-for-service planner run the numbers for me to verify I could afford the CCRC.
That confuses me. I would think your expenses would change significantly once you entered the CCRC. I’m sure you needed to assess income, but how was past spending important?
Some expenses went away, to be replaced by one monthly payment. Some did not, although he included travel money I haven’t spent. I still have a car, I still wear clothes, I still eat out and buy groceries, although not as often, I still give money to charities, I still have subscriptions, I still pay my dentist, etc. etc.
I track my expenses on a monthly spreadsheet, mostly because I enjoy knowing where things are going. It’s relatively easy because I don’t spend much, and rarely spend anything at all most days of the month. While I think there’s value in knowing what you spend at the end of the month, I would only recommend detailed tracking if you are actively looking for things to cut.
I don’t track our spending. But if others like to, or feel it’s necessary, who am I to quibble? Along the same lines, I hear some folks have six bank accounts, each for a specific purpose. Crazy, perhaps? Again, who am I to quibble?
Some people like complicated finances
All accounts alive and well, all set on automatic. Rarely actually have to pay a bill, never question what Connie spends, always know what is available for travel and for extra expenses if necessary. I don’t have to do nuttin. Crazy?
ye gads, is it an AI spreadsheet?
Jonathan, we used to have 2 checking and 2 savings accounts. I found as they got more money in them, I started being more anxious about them and thinking we needed to make more interest. So now we just have 1 checking and one money market and it works out better. Chris
Detailed tracking and spending made me anxious b/c I couldn’t reconcile things to the penny. So I quit doing it. Right now we are tracking, but Spouse is in charge of it on a spreadsheet. I did do some tracking through the years, but it was things like the sinking funds (after I learned about them), not running up our credit cards, things like that. Now that we are retired, I am not sure if we need to track more closely? So far we seem to be ok. I am thinking if there is ever a time where we are taking from savings every month, that we might need to dissect things more closely? We are frugal, like a lot of the HD folks. Chris
I worked full time and was a single parent. For a long time, there was no “fat” in my budget. In order to be in control, I had to be aware of every dollar spent. Now, I don’t have to keep track of every dollar spent, but I feel safer doing so. My system works for me and makes me happy. I’m glad yours works for you.
I don’t remember where or when, but many years ago I read that if you lived below your means, a budget was not necessary.
Back in the days when money was tight, I tracked my spending to some degree, and I feel it helped keep me on the rails.
These days there’s always money left over at the end of the month, and I’ve lost interest in tracking anything.
For those struggling with finances, I think your AI query summed thinks up pretty well.
But can’t you accomplish those things using my method? Do you need to know you spent $4.50 on a bagel and coffee last Tuesday? I know if I live at below or above my means by looking bank accounts and if credit cards are paid in full each month.
PS What I describe has been the case the last 56 years, not just when things got pretty good around 2005.
Just my opinion Richard, but yes, some people need to look at their spending through a microscope. I never tracked cups of coffee or those Little Debbie oatmeal cream pie cookies I so love, but a less detailed record helped me to communicate our habits to my first wife. Money management was not her forte.
All opinions are welcome. I realize some people need the deep dive to be comfortable. I’m just trying to understand why?
Like everyone living within their means our budget is our net income. It can’t be anything else can it?
Some people are naturally big picture, top-down thinkers. Others are wired as bottom-up, not feeling like they really understand something unless they’ve wallowed in the details. My strongest teams at work had a balanced mix of both.
Many people who suffer depression cope by spending. After we divorced my X nearly spent herself into bankruptcy. My kids took control via strict budgeting, and I continued paying spousal after the order expired to help her. In her final years (she died last September) she got things under control. That never would have happened without a budget.
Very decent thing to do on the part of the children and you🙂