Knowing what you spend is important to your personal financial health. If you have looked at my Understanding your debt post you read about how I worked at getting my debt paid off using a spreadsheet to help me track the big picture on a month to month basis ultimately paying off credit card, car, & student loan debt.
At about the same time I created the spreadsheet, I started tracking very closely what I spent. Back then I used a pencil and pocket sized pad of paper I carried with me. As I paid cash for goods and services I wrote down the daily expenses as I incurred them and at the end of the day summarized the totals in a spreadsheet. This was a very cumbersome and time consuming process. There were times where I missed a expense because I did not get a receipt after paying cash (today I’m not sure why businesses don’t give you a receipt when you pay cash).
I looked around for a better solution back then (2004-5ish). I did have a Palm Tungsten PDA, and found a expense tracker that helped me track and automatically sum expenses as I incurred them. The only problem at the time, was I had a mobile phone and a PDA, carrying around 2 devices was problematic, I would at most times forget the PDA.
When the iPhone came out (I got the 2nd gen one), I realized this was device that allowed me to have software applications (expense tracking) along with the phone and a bunch of other future applications. Yes, there was the Palm Treo, but for some reason I did not jump on that device at the time, maybe it was because I recently bought the Palm Tungsten and had a investment in it. I moved to the iPhone with the expectation that a expense tracking application would soon be created based on a better user interface.
I now use my iPhone with a expense tracking application called iExpenseIt ($4.99 from the App Store).
I don’t use all the features of this software (like adding deposits and budgeting), all I use is the expense & reporting parts (the summary tables & pie charts are great). I also only track cash & credit card purchases at the time I incur the expense. I really like the feature to export a CSV file via WiFi or Email, this allows me to move the history to a spreadsheet for longer history retention.
What I have found, based on the data tracked, is that for my family of 4, we spend about the same amount on food from month to month. If we eat more at home we spend more on groceries, if we eat out more we spend less on groceries. By the way, eating will likely be your largest expense, it is for us.
I certainly wish I had a expense tracking application like this back in high school & college, it would have allowed me to understand where all my credit card debt came from (likely from a lot of pizza). I may have had the opportunity to see my credit habits earlier and reign in my spending, something that took me so long to pay off. My kids will certainly have expense tracking down by the time they hit high school.
I hope this post was useful and provides one example of what you can do to keep a grip on your personal financial situation.