But keeping track of expenses is hard!


I have suggested that you keep track of your expenses as they occur throughout the month.

This raises some eyebrows, and questions are often asked. But instead of a standard FAQ, I thought it might be more fun to hash this out in a sort of Socratic dialog. Which might actually be the same thing, now that I think of it.

Inventor of the FAQ. Photo courtesy of mmarftrejo
Inventor of the FAQ. Photo courtesy of mmarftrejo


So you’re asking me to keep track of all my expenses?

That is correct.

What do you define as “expenses?”

I mean everything that you spend money on in a given month that isn’t a regular bill. So things like food, gas/transit, clothing, fun, etc.

So not my phone bill or car insurance?

Correct, not those.

What about student loan payments?

You’re making regular monthly payments, so that counts as a Bill. You still want to keep track of that, but that’s different from Expenses.

What about credit card payments?

That’s up to you, but if you’re making regular monthly payments, it sounds like a Bill to me.

What about ________ ?

I want you to keep track of Bills too, so at the end of the day it doesn’t matter what you call it. Expenses are just those things you do during the month that aren’t regular, which is why it’s so important to keep track of things as you go. A lot of little payments can add up to a big payment, but you may not notice this if you’re not keeping track.

How many categories should I have?

Doesn’t matter. Do you spend a lot on some thing? Might want to break it out its own category. I’ve seen people use six categories and other people use seventeen. Make it meaningful for you.


How often should I be doing this?

I recommend daily, but every few days is fine if you can be good about remembering.

Wait, so every time I buy anything, I’m supposed to write it down?

Yes. Use a notebook, spreadsheet, or your phone.

I can’t do that!

Why not?

That’s a lot of work.

Not really. It takes me no more than a minute to update my spreadsheet when I do it. It shouldn’t take you that long, unless you had a particularly active day.

But it’s stressful! I’m stressed just thinking about it.

Why is it stressful?

I’m asking the questions here!

Oh, sorry.

But having to keep track of everything, every time I spend anything? You don’t find that stressful?

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Well, actually I think that being unaware of what I’m spending sounds more stressful to me.

Isn’t there an app that can take care of this for me? Can I automate this in any way?

Well, I’m sure I’m not the best person to ask about this, but I’m sure there are lots of apps. That said, I think using an external process sort of misses part of the point.


So what is the point of this anyway?

There are a few reasons for keeping track of your expenses on a day-to-day basis.

First is that you know exactly how much you are spending, and how much you have spent already. If you’ve allocated $300 for food shopping, and you’ve been keeping track of every time you’ve been to the grocery store, you’ll know how much you’ve spent so far, and thus how much you have to spend for the rest of the month.

But there is an additional benefit. When you have to track your spending, it becomes kind of an accountability partner. If you spend $5 on coffee everyday, then you’ll need to come to terms with spending $150 on coffee per month. It might, just might, cause you to rethink your purchases slightly. And in this way, it might feel like you’re getting a raise.

The point is that you become focused on this task of being a steward for your money. When you focus, money doesn’t get away from you without you noticing. This means you’ll likely have more. And if you have more, it means you can do more things with it. Like pay off debt. Like invest. Like give to someone who needs it. Like have awesome adventures.

If you fear what you might find out, that should be interesting to you. You may want to ask yourself what it is that you’re fearing that you’ll find. Do you feel like you’re spending “too much” on something? If so, why? What does “too much” mean? And how much is too much? If you’ve allocated money for something, and you feel like it’s too much, then you might want explore the value judgement you’re making. (If you haven’t allocated that much money, then of course it’s too much.)

Oh right, this was supposed to be a dialog

What about putting cash in an envelope for each category and only spending that cash. That way, you wouldn’t need to keep track of anything, as the money would keep track of itself.

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You could do that. But that sounds stressful to me!

But enough about the Socratic Method. Do you find keeping track of your expenses stressful? Why?


  1. Edward

    May I suggest the ExpenseMagic App for iPhone for recording all your receipts,
    bills, invoices and expenses? It captures, stores and processes expenses and receipts with the snap of the iPhone’s camera. It’s effortless, no more lost receipts, no more receipt clutter in wallets and purses and no more data entry. You even receive an expense report at the end of each month in both PDF and CSV formats with all your costs listed there. For the user it provides a record for reflecting on spending, tackling unscrupulous retailers or returning an item to a shop. And if you’re self-employed it’s
    an awesome tool for capturing business costs to offset against income in your tax

    • Mike

      Hi Edward. Thanks for the idea. I’m sure that could work for some people, though it seems more like something you’d use for professional reasons and less for personal budget accountability. (But I don’t have an iPhone, so I can’t say for sure!)

      But really, as long as you set up that feedback loop of knowing when you’re approaching/exceeding the budget limits you’ve set up for yourself, then the solution is a good one!

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