Everyone says if you want to get ahead financially you need to track your expenditure. But how do people actually do this in the real world?
As an opening shot, I thought I’d describe my method. It’s not perfect, but works for me.
In the bad old days I was satisfied that I spent less than I earned and there was always something left at the end of the month to save. But that’s not enough.
At times over the past 15 years I’ve used Excel, Microsoft Money or Intuit Quicken to do a one-off analysis of my spending. But in the case of the latter two products I simply never seem to find the spare time to download my statements and do the (albeit small amount of) work needed to track my finances. Naughty me.
So last year I reorganised and rationalised my accounts. Then I did something that is dangerous in the wrong hands: I decided to put virtually all of my spending through my Visa card so I can see exactly how much I’ve spent in a month very easily.
To the chagrin of many shopkeepers I’m sure, I’ll pay for items costing as little as $2 with said credit card instead of paying cash. That way I can see where I’m frittering the small stuff. If I was to do this with an EFTPOS card it would most likely cost me a small fortune.
I have also managed to get almost all of my bills such as electricity, telephony and internet, and much more to be charged to my credit card.
The next trick is that I’ve got a direct debit set up to pay off the credit card in full once a month. I have a repeating reminder in my electronic diary to transfer funds into my current account three days before the credit card payment is due. So I never ever pay any interest.
Because I see the credit card payment each month I can gauge with ease if I’ve spent more or less than the previous month. If need be, I can download my statements into Excel and analyse where the overspending has occurred.
A nice little spinoff from my system is that I clock up large numbers of reward points – especially from the utilities bills that are paid by credit card.
As I said, using your credit card to pay for everything as I do can be very dangerous in the wrong hands. If you have see money and spend-it tendencies, then don’t try this at home. You may end up increasing your spending rather than controlling your finances.
I’m sure there are RaboPlus customers out there with much better systems than me and I’d love to hear from you. I also took the liberty of Googling the subject to see what others do – in the hope I could learn some tricks.
Most used Microsoft Money, Quicken, Excel or other lesser known products such as Yodlee Moneycenter, which doesn’t appear suitable for New Zealand, Mint.com, or YNAB Spreadsheet.
I did like the idea of tracking my finances using a Pocket PC or Palm Pilot. Unfortunately Microsoft Money 2007 no longer synchronises with Pocket PCs – although there are third-party products that do this.
Plenty of other products that enable you to track personal finances on your PC, or Palm Pilot of Pocket PC, are available through websites such as Download.com or Tucows.com.
How do you track your expenses?