Tracking every expense

By Stew


On my personal finance journey, I have come to understand that knowledge is power. Nothing demonstrated to me the wastefulness of our spending habits until I started keeping track of our finances and could read it in plain black and white. I cannot say that I have continued this habit to this day – Mrs. Stew and I have a different approach to budgeting nowadays and it works for us. However, I thought I would share two anecdotes that could help you to reinforce this principle in your children.

My first story is about my boyhood pastor. “Pastor T” is well into his 90’s now. I’m not sure that he has the mental capacity to still track his expenses to this extent, but when I knew him in his 60’s and 70’s, he tracked every cent that he spent, by hand. Pastor T could tell you to the penny what he had spent on soap in 1954. I was young, but I distinctly remember reading our church financial reports and seeing every penny of spending accounted for. I even remember an incident where he took a group of us boys into the bathroom and showed us how to keep our toilet paper usage to a minimum. Not graphically, but showing us how to count the exact number of squares that were necessary. Something like that might sound a little creepy nowadays, but he impressed upon us the importance of wise stewardship – in everything.

Pastor T is a man who never went into debt and he trained his congregation to use money wisely. The ministry that he left behind has undertaken a number of large building projects and supports a large number of missionaries even though the church itself has never really numbered more than 100 members or so. They have no debt.

Another person is a family friend who grew up in the northern Midwest. I met “Emma” about three years ago and in my conversations with her husband he shared that Emma had tracked every expense since she was four years old. Over the years she developed good money habits and when they got married, she handled all of the finances for the family. They have been married about fifteen years and in that time, they purchased and resold several houses, each time they managed the equity to the point that they were completely debt free when we met. Everything was turning out well for them until my friend lost his job suddenly and Emma was diagnosed with cancer – both events happening within six months.

They would have never survived financially if they had not been debt free with a good-sized savings to boot. Emma learned the value of a dollar at a young age and used that knowledge to protect her family during a time of great financial turmoil.

Here is what we can take from these stories – teach your children to value money properly. A great way to do it is by writing down every expense. There will be times when your children spend money wisely and times when they spend money poorly, keeping a record of financial missteps is a good way to teach them to do a cost benefit analysis when planning future purchases.

I think it is a good time to buy a notebook for my five year old and seven year old daughters.

Article by Stew

Photo by u07ch

6 Responses (including trackbacks) to “Tracking every expense”

  1. Luke Says:

    I’m a huge proponent of tracking every expense. I did this for a while with a spreadsheet and receipts, but it got very tedious. I created NeoBudget – – to make this much easier. With NeoBudget, I don’t have to track each expense, I let my bank do that for me. Every week or so, I upload my transactions from my bank to NeoBudget and categorize them into envelopes.

    This has let me track my expenses in just a few minutes a week, and you’re right that knowledge is power! I found some areas in my spending habits that I could easily change to gain some extra cash.

  2. Mike Says:

    I was able to track down every single penny for about 18 months before I go into home renovation.

    What I have learned from this experience is that when you track down all your expenses you tend to think twice before spending your money. You know that you will have to write it down somewhere, which is more committing than simply swiping the credit card and be discouraged once you receive the bill a month later!

    This reminds me that I should consider going back to my good habit of tracking down my expenses ;-)

    I find it easy with Microsoft Money. It provides nice chart of your spending categories at the same time.

  3. Craig Says:

    I track my expenses but not necessarily every expense. It’s too tedious and does not serve me any real purpose. I track my cash as one but not specific items.

  4. Susie G Says:

    Well, we have had “the book” in our house, where everyone tracks their allowance and spending – each kid has a page going at all times. Unfortunately, they were awful at it and lost their allowances many times for not having tracked when they last got it. If it wasn’t tracked, you couldn’t collect any back pay … I can’t say they are any better now that the youngest is 18, but at least most of them are solvent… Even today my daughters are not sure when they last paid their phone bills, and so it continues …

  5. Ian Smith Says:

    You hit the nail on the head about teaching children the importance of good financial habits. I worked in a bank for the last 3 years and I couldn’t believe how many parents not only weren’t teaching good financial habits, they were actually teaching BAD habits!

    Numerous times, a parent would bring in their 16 year old to open a checking account. I’d ask them about opening a savings account a well. The parent would answer “he/she doesn’t need one.”

    Tracking expenses is paramount to managing finances. If I told you to walk from home to work while wearing a blindfold, you’d probably have a bit of trouble getting there. You might even get hit by a car. It’s the same with finances. Close your eyes, even for a second, and you risk getting hit by something unexpected.

    It used to drive me crazy when people would complain about overdraft charges when, by their own admission, they didn’t keep a register. They wouldn’t even pay the minimum amount of attention! And this isn’t an exageration. People have told me that the bank should call them if they run out of money.

    The complete lack of financial education is disturbing. There is nothing more basic to survival then effective managing of resource. If you were stuck on a desert island, you’d ration your food and make sure you don’t run out. That’s simple resource management. Money is simply a way to manage a very large number of resources- but only if we pay attention.

  6. Andrew @ Earn Give Save Says:

    I’m not sure writing it down on paper is necessarily more impactful than keeping track of it in Quicken or Mint. With Quicken we are logging transactions every other day or so, so we tend to be pretty up-to-date with where we are in that month. I think the same principle does apply, however””when you’re educated and know what’s going on, you tend to make better decisions.