I love everything that relates to healthy financial habits, but there’s one thing I can’t stand and will (probably) never do. And it’s expense tracking. I know, I know… Most finance gurus say it’s the most important thing to do as it gives you an overview where all your money goes. If you’re new to saving money, then it might be a good starting point. But if you’re used to saving a set percentage of your salary then you might not find it necessary to track everything down.
For me, personally, writing down all my expenses every day is just such a boring thing to do that I can’t force myself to do it. I hate it with passion. Even just thinking about it makes me die of boredom. And that’s why I just don’t do it. However, there are a couple of things I do, to stay on top of my good financial habits.
1. Set yearly saving goals for better expense tracking
To set yearly saving goals, you should write down how much you’re going to save from each salary you get. I allow myself a 10% error there, since my saving rate is pretty high (it’s about 40-60%, depending on the month).
It’s so much easier to look at my bank account at the end of the month and see whether I hit my goal or not. If not, I don’t beat myself up about it, I’ll just make sure to hit the goal next month. Doing better next month requires lots of self-discipline, obviously. If you don’t have it, you might be better off writing down every single expense.
To bring an example – let’s say I wan’t to save € 30 000 in one year. This means that I need to save € 2500 a month. Meaning that if I look at my bank account at the 4th month, I need to be looking at € 10 000. From there, you can calculate how much did you miss or surpass, and make changes accordingly.
2. Create monthly summaries for expense tracking
Going over your expenses from month to month means that you don’t have to do it every day (captain obvious here).
I tend to look at my bank account at the end of each month to see if I’ve hit my goals with the savings or not. If I’ve hit it, I won’t spend too much time reviewing where all my money went. If I missed it, I’m going to take a more detailed look to see where did all my money go. Expense tracking doesn’t need to be as tedious as we’re told by Dave Ramsey.
Most finance gurus recommend setting money aside right after you get paid. I used to do it as well, but now that I’ve gotten better at managing my money, I stopped doing it. Instead, I review my balance every month and make sure I hit my saving goals. It’s just easier for me, and I rarely have a temptation to spend the money from my savings. This is because I’ve set myself reasonable saving goals – which means that I can still buy things I like every now and then, and not eat noodles for every meal.
3. Set money aside right after you get paid
I know that I just said that I don’t do it. But I still agree with all the financial gurus who recommend it, and the reason for it is simple. Most people’s financial behaviour is poor. Seeing money on their regular bank account makes them think it’s “leftover” and there for spending.
If you’re starting your journey to financial freedom, I’d recommend you to open a different savings account, where you’ll immediately transfer a set percentage of your salary, whether it’s 10, 20 or 50%.
Setting money aside right after you get paid also makes you realize that you have less money, and that’s all you can spend. So hopefully, by the time you reach the end of the month, you don’t have to take anything from your savings, and you’ve hit your monthly savings goals. Which means that you also don’t have to write down everything you bought this month.
Read my other articles on finances: