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How much money did you spend on In-N-Out, Alerto’s burrito, and fast food last month? What about gas? Or Groceries? Do you ever wonder where your money went at the end of the month?
Keeping track of your daily spending can definitely be a challenge, but thankfully, there will soon be a very Minty way to do it using
online finance software!
So why is it important to keep track of your daily spending?
If you’re inclined to a start a budget, the very first thing you should do before you start setting limits is to find out your actual spending habits. If you don’t have a clear picture of how much money you actually spend on a specific category, it will be very easy to set unrealistic and unattainable goals.
Example: You have a family of five and your actual monthly grocery spending is about $650. Without knowing your family’s actual spending, you set a goal of $500 for groceries in your budget. Of course, you easily exceed the budget. You may get frustrated and decide that budgeting just won’t work for you.
Even if you don’t want to budget, keeping track of your daily spending with budget planner software allows you to know where your money is actually going, so you can better direct that money toward an area you really want it to go. After all, how many of us have spent more than we realize on shoes, entertainment, and eating out without realizing it?
Example: You don’t have a budget (because you already have the discipline to put away a good percentage of your income every month). You notice that money is getting just a little bit tighter in recent months, so you log into your favorite free personal finance tool, and sure enough, there is a spending warning on the “Eating Out” category. You make a mental note to stop treating your less generous friends, and all is well again.
Give Me Some Real Life Examples, Please
Imaginary scenarios aren’t cutting it, eh? Let’s take a look at how fast food spending surprised a certain anonymous person.
For the past few months, I’ve noticed that I’m missing a couple of bucks here and there. Being the curious budgeter that I am, I logged into my favorite free personal finance tool, and typed in “Gas.” I’d been driving a bit more recently, so I thought it’d be a good place to start.
Hmm… Everything looks good. I did drive a bit more during April, but that one extra tank of gas shouldn’t account for the missing pieces of eight. Fun observation: I pump about the same amount of gas during each trip to the gasoline station, which is about 12 gallons. Even though I haven’t changed the amount of gas I pump, the price has steadily gone up — a reflection of recent raising gas prices. D’oh!
Deciding that gas wasn’t the culprit and taking another bite out of my juicy carne asada, I typed in “fast food.”
Uh… $112 on fast food? Woops?
You’ll notice that before the week of March 28, I didn’t even spend a dime on fast food. Quite a contrast in spending habit, and I didn’t even notice it. Five dollars for a combo meal here and there can really add up over time.
If I didn’t decide to check my fast food spending and keep the spending trend up, I would quickly spend about $700 per year on fast food alone (not including eating out at restaurants). Yikes!
Different Methods to Track Your Daily Spending
The important thing about keeping track of your daily spending is to find the method that works best for you. Having said that, here are various different methods you can try out:
Whatever you decide, choose a method that you’re comfortable with and can keep up with. Try keeping track of your spending for a month and then add it all up at the end of the month. You may be surprised to find out how much you’re spending on trivial expenses!
Quick suggestion: When you categorize and add up the expenses, make it meaningful by creating categories that means something to you. For example, you can have a large category called “food,” but that won’t really let you know where the money is going. Specify a category for “eating out at sit-in restaurants” and you’ll be able to better distinguish between your spending.
What to Do With the Numbers?
You can take your expenditure tracking a step further by creating a budget, making a mental note to direct your spending toward higher priorities, or inputting the numbers in convenient online calculators such as the Daily Spending Calculator from Canada’s Office of Consumer Affairs. It’ll allow you to see the really big picture.
Example: Using the calculator, I input my weekly spending on fast food (according the graph above), which is about $14. I plugged in my age of 24, maintained the retirement age of 65 and inputted the expected inflation rate along with expected investment return. The results, I’ll admit, are mind boggling.
The total amount of money I’ll spend on fast food until my retirement would amount to about $30,000. Had I saved and invested the money instead, I would have gained a return of $270,000. All from a daily spending of about $2 for a quick lunch!
Tracking Your Daily Spending Check-List
Have your own secret sauce way to keep track of your daily spending that wasn’t mentioned? Feel free to share!