Bart, over at the Personal Finance and Money Stack Exchange site, lacks discipline with tracking his finances. He asks:
I have had very little success with managing money. I have gone bankrupt once ($50K in credit card debt) and since then I no longer have credit cards (just a debit card) but my spending is still totally undisciplined. On a good month, I simply spend everything I make… on a bad month I dip into the leftover money that I got returned to me in the bankruptcy when my property was sold. So, basically a basket case.
I have tried talking to a financial professional but he said “keep track of your expenses for a month and then come back to me”. I asked him why he can't just use my bank's online banking site, since I use my debit card for everything, but he said that the bank's site is not detailed enough, since it only says which stores, etc. I paid and not exactly what I bought. I keep telling him I just am not disciplined enough to keep track of my spending and he said, “well I can't help you with that” and that was the end of it.
Any ideas on getting out of this rut?
Great question, no? Among several good answers was mine:
You have to track your spending for a month, down to the cent.
Without those records, the person trying to help you has no real data.
Even a week would be a start. Heck, try just doing this today. See if it works for you.
Throughout each day:
- Start with some predictable amount of cash ($20, or whatever you want, really).
- Take a brightly colored Post-It and put it into your wallet. The one that's about the size of an index card is ideal. Best idea is to fold the Post-It around your cash so that you can't help but see it when you take the cash out.
- Carry around a pen or pencil. Each time you spend cash, write it down (what it was, and how much) if you don't get a receipt.
- Every time you use your debit card, be sure to get an itemized receipt. If you don't, write it down as if it were cash.
Each evening:
- Look at what you've written down from what you've spent cash on. When you subtract the total of those purchases from the cash on hand you started the day with, it should match. If it doesn't, figure out what the difference is right then. It won't get easier to track down later. It shouldn't be that hard. Just mentally go back through your day and you should remember. If you just forgot one thing, the amount should tell you what it was you bought. (“75 cents off? Oh, right, that was a Snickers bar from the vending machine.”)
- Put that Post-It and the receipts in one place. Paper-clip or staple them together. Put today's date on it.
- Congratulations! You just have a record of everything you spent for that day.
At the end of a month (or week, or whatever period you want):
- Go through your daily records and categorize the expenses by type. Then stuff will start to jump out at you. (“$45 per month on coffee? No way!”)
Each day you do it successfully it will get easier. Let us know how it works out! Best wishes!
After writing about this stuff for over five years, you'd think I'd have this stuff down, right? Other bloggers have been tracking their finances in Quicken for well over a decade, so I'd be all over this stuff, right?
The truth is, I have the same level of follow-through as Bart. My concentration goes elsewhere, change gets thrown into a big bowl at the end of the day, and receipts gets thrown into a box (just so I have them) but stuff is still rarely tracked except for a cursory glance of the credit card bill to make sure there aren't any fraudulent charges creeping up there.
The truth is: I need to follow this advice as much as he does.
And, well … what do you know? It's the beginning of a month! Let's see if I can follow my own advice.
If something different has worked for you, I'd love to hear it in the comments!
