Why (and How) I Track Every Dollar We Spend

Managing Money / Tuesday, May 29th, 2018

For the last 25+ years, I have tracked every dollar we spend (and every dollar we earn) in Quicken.

Oh, and I enter every transaction manually.

Doing this is so second nature that I don’t think I’ve ever written in depth about it here, even though it’s my most long-standing, and probably most important, financial habit.

Tracking every dollar in and out, even manually, doesn’t take as much time as you’d think. A lot of transactions are repeat transactions (same grocery store, same mortgage payment, same utilities) and once I start typing, the rest of the transaction details auto populate so I just have to hit enter.

But, still, tracking every dollar does take some time, so why do I do it?

First, it’s how I keep and organize our financial records.

Everyone needs some kind of system, and this is mine. And the effort it takes pays off a million times over. Once entered, these numbers provide answers to any number of questions, from the most basic:

• What did that vacation cost us?

• We’re going to a graduation party/wedding/First Communion. How much did we give her sister for the same event two years ago?

• When is the last time we had our air conditioner serviced?

To the most crucial (especially at tax time):

• What estimated tax payments did we make?

• How much were our charitable donations?

• What did we pay in property taxes?

All of these questions can be answered in seconds with a simple search of an account register or by generating a report and I’m addicted to having that info at my fingertips.

Second, entering transactions, which I do once a week or so, creates an awareness of where our money is going in almost real time.

I throw receipts on my desk and enter them from time to time, then shred any receipts I don’t need to keep when I’m done. When I’m reconciling our bank or credit card statements, I pick up any transactions that I’ve missed.

Speaking of which, reconciling statements is a breeze. It literally takes a couple of minutes and everything feels so nice and complete when I’m done.

And while I’m entering and reconciling, I’m taking note of where we are spending our money.

Of course, you don’t have to do all of this manually. Quicken, and any other program worth its price lets you download your transactions directly from your banks, credit card companies, and other financial institutions and that can be a big timesaver. 

So why don’t I do that?

Mostly because I’ve been using Quicken so long that downloading wasn’t an option then. I honestly think I was using it before the internet was even in widespread use (I’m old!) so manual is just what I’m used to.

I also feel like I have more control, and will catch any bank errors more easily if I’m entering manually. I don’t know that that is true, and – good news! – I never find mistakes. But still, I feel more in control.

Entering transactions manually means they are cleaner, meaning prettier, than when they come down from the bank with all the extra numbers, random capitalizations, etc. That’s probably not important to most people but, it seems to matter to me. :)

Perhaps most importantly, I’m not sure that reviewing downloaded transactions would give me the same awareness of our spending that manually entering does.

Finally, I track every dollar in and out because having all this info organized in one place tells me a story about our money.

Once information is entered, it can be used to generate reports, and reports give me the answers to big-picture questions like:

 • Did we spend more or less overall this year than last?

• Which categories are up and which are down? And why?

• What did we spend eating out last month? 

Just having this knowledge is enough to cause some reflection and possibly even improvement in your finances. Financial Planner Lauren Lyon Coles puts it this way:

I agree that simply paying attention can cause you to make some better decisions with your money.

However, I don’t think that tracking alone is usually enough to make big changes in your finances. At least it wasn’t for us.  But tracking provided some inspiration for us to do the big things and also gave us the information we needed to create a plan to do those things and to see track our progress. 

So why tracking isn’t everything, it all starts with tracking. And we’re still using it to evaluate and set new goals.

Thoughts? Do you track your spending? What do you use? And if you’re interested in more details about how I use Quicken (categories, specific reports, etc.), let me know.

P.S. As I’ve said, I use Quicken to track our income and expenses. (Note: That link is my Amazon affiliate link, which means if you click on it and decide to try Quicken, I will earn a small commission at no cost to you.)  I buy the most basic version of Quicken because how I use it doesn’t require lots of bells and whistles. I’ve tried other financial programs and software, but none have been as good a fit for me as Quicken. Others I have heard good things about include Mint, YNAB (You Need a Budget) and Personal Capital.

12 Replies to “Why (and How) I Track Every Dollar We Spend”

  1. Over 20 years of tracking — wow!!

    I started using You Need a Budget (web based and with a mobile app) in January of 2016. There’s a whole cult following for this “envelope system”. Basically, you can only “budget” money you have on hand now. So if you’ve got $1000 in your bank account, you can allocate $1000 to categories (as broad or granular as you choose). It also believes (like you) in entering your transactions as you incur them, rather than letting the bank reconcile (though you can import and it will match up the manual entries and/or create those you did not enter).

    So it’s similar to the idea of getting your paycheck and putting the cash into envelopes (housing, grocery, utils, dining out, etc), but all done via web/app now. If your category has funds available, the balance is green, if you’ve overspent, it’s red. It has a nice interface for CC spending. If you use your CC to buy something, it moves the amount in your base category (say, clothes) and moves that amount to your “CC Payment” category.

    I do believe the manual entry is key to any system you might choose to use. If you only look back, it’s just a reporting mechanism, not really a management tool.

    1. Eileen, thanks for sharing your experience. So interesting that YNAB also encourages manual entering. I’ve heard good things about YNAB. Sounds like it’s really working for you.

  2. I agree about the tracking. When my husband and I actually looked at what we were spending (wasting) our money on, we were shocked. Changing our financial habits was much easier when we could see the effects in black and white. As far as software, I switched from Quicken to Moneydance several years ago. I paid $35 for the software and haven’t ever paid another dime. There are no forced upgrades like Quicken and the customer service is great (definitely unlike Quicken, which is one of the reasons I switched). I’m planning to buy a new computer this year and I’m hopeful that the newer version of Moneydance is as good as the 2011 version I have. Also, I heard that Quicken is transitioning to a subscription-based service. It sounds as though that won’t affect you since you don’t download transactions from your bank but I think that might give some people pause. I like the idea of buying the software once rather than paying for it monthly (and so does my budget!). Thanks for a great article!

    1. Louise, I don’t think I’ve heard of Moneydance. I’ll have to check it out. Did you find it similar to Quicken?

      1. There was definitely a learning curve but the functionality was similar. I just looked up the reviews for the new version online and they’re not as good as I had hoped. Maybe I’ll have to take a look at some of the other options when I buy the new PC.

  3. Yep, tracking really does help! I use YNAB (you need a budget) and love that we can track from our phones as well, so hubby and I are on same page.
    I’ve missed your posts here. I’ve finally made the decision to leave my blog for good. It’s no longer there. However, I have aspirations to create a midlife money blog and talk about our preparation for retirement…. what do ya think?

    1. Sharon, I think it’s a WONDERFUL idea. There is a real lack of voices blogging about midlife money. I hope you do it!

    2. I would second this idea. It would be interesting to me if you also took into account adults who came of age during the 2008/Great Recession and may not have been able to follow traditional money advice due to living paycheck to paycheck for so long. But these same group needs advice of what to do now moving forward. A lot of advice for midlife assumes that people have already done many things to maximize financial opportunities along the way. At any rate, it would be interesting to see your new blog.

  4. So happy to see your post! I’ve missed them too.
    I also use Quicken and enter transactions manually. I’ve probably been doing this for nearly as long as you have and I agree wholeheartedly that it makes a huge difference in managing your finances. I log into our bank account almost every day and enter any new transactions in the Quicken ledger. It usually takes less than 5 mins and has just become part of my morning routine. I have tried other budget software over the years but always come back to Quicken – probably because I’m so familiar with it that it’s become second nature.
    I would love to see a follow-up post on the categories that you use and reports that you like! I love that I can quickly sum up how much we spent on a trip or for an event.
    Do you use Quicken on your phone?
    Also love Sharon’s idea of a midlife money blog! I would be very interested in reading that!

  5. I’m glad you wrote this post. I’ve been meaning to get back on top of tracking our finances and this was a good reminder.

    We have used Mint half-heartedly and YNAB whole-heartedly several times. I generally like the idea behind YNAB, but found assigning every dollar to a job to be too cumbersome, especially when my boyfriend of 15 years is much more impulsive (not a negative comment, an observation…he’s amazing) than I am and just threw away the assigned budget on a daily basis. I would end up using YNAB as more of a tracker after transactions were concluded than a future budgeting tool.

    After reading this post, what might work for our family at this time is to start by just tracking the spending and being aware of where it’s going. And from there he can make decisions on his own (without being pigeon-holed) on where he best wants to spend disposable income.

    By the way, I’m new to your blog and have subscribed. I found you, oddly enough, from a Google search about Heritage glass canisters and how to incorporate them into decor and then started clicking into various posts. Sound advice all around! Looking forward to following you (in a totally online-only, non-creepy way..haha!)

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