SEVEN TIPS FOR TRACKING EXPENSES

Confession time! I used to think tracking cash flow wasn't really something you had to do as long as you spent less than you made. I have done a complete 180 on that and now believe it is one of the most important habits an individual can do to steward well what they have been entrusted with.

I first started tracking our personal cash flow a little less than 10 years ago when we started to have quite a bit of varying income due to travel nursing and odd jobs. Below are seven tips that have been helpful to me.

First- you have to setup the system for tracking cash flow. Typically people either use an app like Monarch Money or a spreadsheet. We found a hybrid approach (Tiller Finance) to be the most beneficial to us personally. I liked that it helped input the data but gave me a little more control over the data.

Second- the fewer the accounts the better. Sometimes people end up with 3-4 credit cards, 2-3 checking accounts, etc. The fewer sources you have expenses on the better when you consider record keeping alone.

Third- know and understand the five uses of money- Giving, Taxes, Debt, Lifestyle, and Savings. Focus on tracking the lifestyle number.

Fourth- the fewer the categories the better. We primarily track nine categories- Phone (which really I should just add in to Utilities), Utilities, Eating Out, Vacation, Auto & Gas, Entertainment, Groceries, Health Insurance, and Misc. There are other transactions that obviously hit our accounts- Transfers, Charity, etc. but I track that a little separately. My general goal for lifestyle is maintain or reduce and that is not how I view Charity. Therefore I track it separately.

Fifth- if it is for vacation or you are on vacation then it is vacation. Now obviously if you for whatever reason pay your electric bill when you happen to be on vacation than it is still utilities but all gas, eating out, etc related to a vacation goes in vacation. I treat all trips that are discretionary (which is effectively all in our case) as vacation. For example, we just went back to my homecoming at Olivet, that is a vacation, as is a trip to see family over Christmas.

Sixth- regular updates are important. Generally monthly or even more regular is preferred.

Seventh- set up a system for comparing how you are doing. I compare what we spent each month to our average. If we did less than the average, great! If not, why not? You cannot just compare to the last month as you naturally spend more money at different times of the year. In our case, we spend more in the summer and less in the fall.

Hope you found something helpful in the above. I am sure I will continue to update and change our process as time goes along. Have a wonderful day!