How I Stop Money Leaks by Tracking Our Expensesposted by Andrea | 10/14/2016
For the past 12 years (since my sophomore year of college) I have tracked almost every dollar I’ve spent. Certainly I have forgotten a few transactions here and there, but for the most part, all my spending is accounted for in my finance-tracking workbooks.
I save a new copy to my computer every year and enter in any expenditures on a weekly (often daily) basis — it takes me less than a minute and it’s a habit now, so I rarely forget.
As I’ve mentioned many times before, my finance-tracking workbook is NOT a budget. It does not limit how much I can spend in various areas or categories… but instead, it tells me how much I actually do spend.
I can look back over the years and see how my grocery budget has exponentially increased from rarely spending more than $15 per week back in college to my current weekly bill — close to $150 at times!
I can track how various utility bills have gone up over the years (partially because we use more, but also because the rates are increasing). I can pinpoint when we’ve added novelty expenses like smart phones with monthly data packages, Netflix, or Amazon Prime. I can even see how our expenses have increased almost immediately after each child is born.
When I first started tracking my expenses back in college, I did it because I had NO idea how much money I actually spent each month… which meant I had NO idea how much to budget for various categories like food, gas, utilities, clothing, entertainment, etc.
I was on a very limited monthly income and I knew I’d have a nice pile of student loans waiting for me when I graduated, so I was bound and determined to keep my monthly expenses as low as possible. By tracking my expenses, I could quickly see where I was spending my money — as well as where I could potentially cut back to save even more.
Now, 12 years later, I no longer track our expenses because I’m worried we won’t have enough money in our bank account to cover our monthly bills. Instead, I track our expenses to see how our spending habits have changed (and continue to change) over the years, AND to spot potential “money leaks”.
It’s always amazing for me to see how easy it is to overlook little expenses that creep in each month or each year — even for a very frugal person like myself.
The cell phone bill goes up by $5 a month, the cable or internet bill goes up by $8 a month, Netflix raises their prices by $1 a month (again!), the electric rate increases just a bit, you have a lazy month and end up going out to eat WAY more than usual, you buy just a couple more gifts for each person at Christmas, you start “window shopping” with girlfriends once a month which eventually leads to purchasing several cute decorative items each month, the grocery bill creeps up $10 or $15 per week, you spring for a special coffee treat after work one day… and then another day… and then another, etc. etc.
Obviously, some of these expenses might be caused by a growing family, changing needs, a new job, or a larger home; but some of these expenses are simply because you didn’t even realize how much more you were shelling out month after month.
Can anyone relate?
While I don’t analyze our finance tracking workbook every month, I do try to take a few minutes to glance at it every 4-6 months — and it’s honestly amazing how many little “money leaks” I’ve found throughout the years.
Everything from grocery splurges that continued on for months at a time, to a pile of “extra expenses” that filled up the miscellaneous category each month. Sometimes my extra expenses were/are legitimate, but other times they are money leaks that, once spotted, I can “fix” and stop leaking (wasting) even more money each month.
Most recently, I realized our cable/internet bill had gone up a little bit EVERY SINGLE MONTH for 6 months straight!
We had been trying to cancel our cable for many months already, but every time we tried to cancel, we were told our internet rates would then skyrocket, so we’d only save a few bucks a month by quitting cable. However, a couple months ago, I finally got an agent who agreed to let us keep our same internet rate and just cancel the cable portion of our bill (yay!)
We literally cut our bill in half and will save several hundred dollars a year on the cable portion of our bill that we almost never used anyway! Instead, we use Netflix for kids shows and movies… and Dave bought a $20 antenna so he can still watch some sports and news.
I could share countless other stories like this from the past 12 years — times when I most likely wouldn’t have even noticed a slight gradual increase in spending over many months and years. However, by looking back over my finance-tracking workbooks, I was able to spot the increased spending, consider if the higher costs were worth it for our family, and then make changes to our budget accordingly.
Of course, I’m not opposed to increasing expenses as our family grows. For me, it’s more the point of being good stewards of our financial resources, saving when we can, and not over-paying for convenience items when we don’t have to.
I’m certain we have saved thousands and thousands of dollars over the past several years, simply because I’m able to spot and stop money leaks, thanks to the fact that I faithfully track our expenses month after month.
Do you track your expenses? If so, have you found any money leaks over the years?
Also, I know my simple Excel spreadsheets aren’t the right tool for everyone, so if you have a great (preferably free) tool you use to track your expenses, please share it in the comments!