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Newly retired one here and working my way through safe withdrawal rates, the 4% rule etc. I subscibed to Monarch to monitor expenses. My question: how many of you out there monitor every I and O on a spreadsheet (looking at you engineers) vs just seeing what’s left in the spending account each month, quarter, year etc?
I keep track of expenses, but don’t really do a lot of tracking of income. I have a pretty good idea of my income, and as long as expenses are less than that, I’m ok.
Yes, I used Excel to track all my monthly expenses and investments. It helps me spend freely without guilt or fear on things I value. It also helps me stick to my plan when markets are volatile. It fits my personality and helps me sleep at night.
There’s tracking and there is tracking. I’ve never been much for precisely tracking spend except in the old days of international travel with paper money, but I do spend consciously i.e. I’ll know roughly whether I’ve spent $250, $500 or $1000 in a week on top of recurring bills. Actually most of that day to day spend now goes through a debit card that I can review with an app in an account which I deliberately top up monthly.
I think in retirement I’ll try to more precisely track at least for the first couple of years which will allow me greater insight into cashflow and thus enable me to maximise cash deposit terms etc*. I’m planning on having surplus relative to my self-allowed drawdown so tracking the delta will allow me to see how much theoretical blow-out fund I accrue.
*I currently have a bunch of inefficiency that doesn’t bother me too much as it’s better than an accidental overdraft if a direct debit gets screwed up, but part of a simpler life will be reducing excess buffers and redundant accounts.
Question: Why do you pay day to day expenses with a debit rather than a credit card? You can get a credit card with either cash back or points. You also can challenge a purchase with a credit card if something goes wrong such as a defect in the product. Some credit cards also extend product warranties. Also I believe that if your card is compromised by something as a skimmer say at a gas station you do not have the protection that you have with a credit card.
I’m not talking major purchases where I benefit from credit card protection and can’t generally be bothered chopping and changing too much for cashback cc deals.
At one time you could get an ATM card that wasn’t also a debit card. The last time I tried I was told it was no longer possible. However, I don’t generally carry my ATM/debit card, and I have never used it as a debit card. I get miles with one credit card and cash back with another. I do pay them off in full every month.
We have always lived well within our means. We are currently living on my small (< 1K) pension and our IRAs. We have always lived well within our means and never have had a budget. I use a spreadsheet that I update to determine our investment, and total net worths.
I have a minimal balance in mind that if we hit it will have my wife (the lower wage earner) claim Social Security, but will not claim mine until I reach 70. We have never been within 100K of that number so I don’t sweat the details.
I love my spreadsheets and use them to analyze “what if” scenarios for taxes and account withdrawals, the latter based on rough estimates of annual spending. As an old-fashioned bill payer I track payments and bills with paper and pen, albeit on monthly tables I print annually from my computer. I like seeing billing due dates, reminders about renewals, and bills that I might otherwise forget, all without opening a computer. Having few accounts with automated payments along with an aging brain, access to this information is essential.
If you are just monitoring expenses I think you can do whatever lets you feel like you are in control. Having said that, keeping more detailed records can be useful in a number of ways over a longer span of years. Here are two examples:
1) If you own a home someday it will be sold and you will have to establish its taxable basis. When did you remodel that bath, and what did it cost? Some items will add to your basis and some not. Records are a must.
2) When something that costs more than a few hundred $ breaks, there is the inevitable question of when did we buy it. How much was it, and did we get a warranty? Do we have the receipt? Let me give you one example….In 1995 we replaced our front door, which has extreme sun exposure. The new door came with a lifetime warranty. This warranty has provided three replacement doors since 1995. At the same time as we replaced the door, we replaced 21 windows and 2 sliding doors. These also came with a as long as we own the home warranty. After 24 years one window failed and because we had records, we were able to get it replaced.
Again, there are multiple ways to retain and organize your info.
Good comment and timely for me as my wife is planning a kitchen remodel. When we sell the house to move into a CCRC in 10 years some of the kitchen remodel will help offset gain on the house. Thanks for the reminder.
i am making sure Connie doesn’t read this one. She is always after me to save the receipts and you have provided a good reason, but at this point the only warranty that I worry about is mine.
Rather depends on how much the house appreciates, and whether you sell it as a couple. The exclusion for single filers is half that for married couples.
I never kept spreadsheets, but now that spouse is retired, they are keeping one to track expenses in this first year. I did learn about sinking funds and we do those and adjust yearly. I tried tracking things to the penny before the internet and it caused anxiety if the accounts were off, so quit doing and put a buffer in the checking account. We do the save first, spend the rest kind of “budget” Jonathan has talked about. Chris
Looks like I’ll be the outlier here. No spreadsheets, no Quicken.
At its very simplest, count up what leaves our two spending/billpaying accounts over a year’s time. That’s our annual expenses in a nutshell. (Some of this is direct expenses but also includes our paying our credit cards off monthly. For this overall number it doesn’t matter what it was spent on, just the total number going out.)
It’s possible to get more granular without software. I think the last time I did this I might have had half a dozen major categories.
We use one credit card that gives us 3% back in groceries and dining out. We don’t use it for anything else. So there’s our food costs. We sometimes pay cash for food or use another card in some cases, but close enough.
Many credit cards will categorize your charges at the end of the year. It’s usually not perfect, but again, close enough.
The important part is the overall expenses number and whether you have or can create cash flow that meets it. To do this I don’t think you need a lot more detail than that. If you need to analyze where to trim costs or a category is going to change significantly, then you might want more detail, but otherwise I don’t think it’s that important.
My husband and I worked out over the years what our safe spending amount was for the next year, so never felt the need to set up any kind of expense tracking system.
As a side note: At the end of the year, our credit cards and bank force spending summaries upon us, and we are confronted with how much groceries, healthcare, and our many subscriptions cost annually. It’s never a surprise, but usually prompts severe streaming-TV cutbacks . . . until we gradually resubscribe to the services again over the year.
I do keep a bespoke one-page “net worth” document that I update twice a year or if any big change happens. I taught myself enough about Excel formulas that when I input current numbers, it does simple column additions & various allocation percentages automatically for our investment accounts, cash, and real estate. It could capture more, but this at-a-glance one-pager is all I can get my husband to look at once a year, if I’m lucky.
Various financial planners have printed out lengthy summaries for us over the years, and a few years ago, I tried out the NewRetirement.com method of inputting numbers to run various plans. But I keep returning to my simple one-page sheet as my main way of tracking things.
Now that we’re shifting from accumulation to decumulation, the numbers will trend in a different direction 🫤. But I still don’t plan to monitor our monthly spending.
Can you tell no engineers in this household?
It’s interesting that family finances are often handled by only one person. I also have one page excel docs that I make Chris look at twice per year. She has an accounting degree and is an expert with excel spreadsheets. She also knows where the passwords are buried and where all the important stuff resides. She will do fine if I get eaten by a shark.
I don’t keep detailed expense spreadsheets anymore. I have a pretty good idea of our main spending – assuming we don’t buy and furnish a new home!! I now mainly use spreadsheets for making projections about cash flow and taxes. This helps me decide how much of a Roth conversion to do. When I was more actively consulting I used spreadsheets to figure estimated taxes and what to contribute to my solo 401k.
Early in the year I spend an hour or two going over the previous year’s spending and updating my cash flow spreadsheet. This is also good for tax prep to capture charitable donations and medical bills.
We started renting our beach home this summer, so I have several spreadsheets to track rentals, expenses, personal use days, and a nice summary sheet that feeds tax forms.
And of course there are the “fun” spreadsheets I play with to figure out fascinating topics like the present value of my future wine purchases, and other such larks.
I use an open source program called HomeBank https://www.gethomebank.org/en/. You can import QFX files for your accounts (which I download). It lets you categorize and tag income/expenses/transfers, report on spending, project, etc. It gives you all the tools you need to slice/dice/project.
I do use a spreadsheet, but I don’t track each expense. But every month I do reconcile my available cash to the monthly recurring expenses and any projected non-recurring expenses (ie. travel, medical, etc) to basicly keep track of where I’m at. I keep a row for each past month so I can look at my history, and I project out a couple years for known expenses. It takes very minimal effort (less than 10 minutes a month) but this let’s me feel pretty confident I know where I’m at and what’s coming.
I’ve used Quicken for decades – it gives a pretty good summary of ins and outs from all linked accounts. My bank and Credit card spending is recorded – which is the major concern. Spreadsheets not necessary, imo.
I don’t do spreadsheets much, but I have used Quicken religiously for over 20 years. I don’t use it to track my investments, but all my other income, and all my expenses, are recorded. Since Quicken pulls the data from bank and credit card accounts, if you give it your passwords, it’s not much effort.
Until I moved to a CCRC last year, any money left over at the end of the month went into my Vanguard MM account and if there was a shortfall the money went the other way. Looks like I will be “topping up” more regularly now, likely about $1,000/month, but I’ll see how it looks after my accountant does my taxes for this year. The medical deduction for my entry fee last year was large enough I got a 100% refund.
Kathy,
Aren’t you concerned with linking your accounts due to the constant security breaches that are reported?
I use Morningstar Portfolio to keep track of my performance but quarterly update my numbers manually.
As an engineer who once wrote an entire article on spreadsheets, I feel like the OP is looking at me. Here’s my answer: for several years I used a spreadsheet to account for every dollar spent (except cash purchases) at the end of the year. I used my checkbook and credit card report to compile the data. Took at least several hours to do. I got a very detailed and accurate picture of where our money was going and how much we were spending. Now that I am sorta retired, I don’t care as much about that data. I do keep track of spending in various categories but don’t track ‘miscellaneous purchases’ any more, which was a pain to track.
But Ken, what about the “fun” spreadsheets?
Some get great joy by dissecting every nickel spent. I use excel for my Checkbook which tells me inflow and outflow. So long as the in is more than the out I’m mostly winging it.
I’m out on this one: but I am anxious to read replies.
Lol Richard, someone keeps hitting your down arrow.
Yeah, I know. Story of my life. It’s not easy being green.
That comment earned an up arrow.
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