I’ve already written about the relatively-sexy, “free-money” topics of credit cards and HYSAs, and as much as I’d like to continue talking about quick-wins and the interesting things, at some point someone has to talk about the boring, unsexy core of personal finance: understanding your habits so that you can set goals. While it’s usually pretty easy to understand your habits on the income side of things (perhaps you’re getting paid bi-weekly for a salaried job, or maybe you’re a student without income, like me for most of the year), understanding where that money goes is usually another story. I used to have no idea where my money went - I just knew that overall, I wasn’t at risk of becoming bankrupt. As I dug into things more, however, I started to realize a couple of things:

1. I eat out a lot more than I thought I did.

2. I underestimated how much larger purchases made up my spending.

Figuring out these kinds of things is step -1 in the Big Financial Picture. It lays the foundation for being able to budget where your money is going to go so that you can stash cash away for retirement, that trip to New Zealand, or paying off loans. The point of tracking your spending isn’t to go materially-celibate and not pay for anything under any circumstances. It’s to figure out where your money is going, and if that aligns with what you value. I love technology and usually end up buying a laptop about every year or so - and that’s mostly fine by me. Eating out, while incredibly enjoyable with others, isn’t something that’s necessary for me to do every single day for lunch during the school year, so I could probably cut back there by starting to pack sandwiches.

In this post, I’ll talk about how I track my expenses and some of the tools that I use.

MY SPENDING SNAPSHOT (excel)

Personally, I use Excel for anything financially-related. It’s what I’m comfortable with, enables quick-and-dirty visualizations, and I can usually get Excel to do exactly what I want. Here’s a screenshot of the Excel workbook that I built to track where I’m spending my money. It covers the past four months of spending (which is when I started):

I also have a pie-chart-view of where my money is going, for a more visually-impactful take on things (click on the chart for a larger view).

At a glance, I can tell two things right away:

1. How much money I’m spending on different categories (It looks like electronics, clothes, and eating out make up the lion’s share), and

2. Which categories I could try cutting my spending on, if I chose to do so (I probably could avoid betting, and I spend a lot of cash on electronics and clothes).

All of this information is derived from a transactions list that includes the date, category, merchant name, and a dollar amount (along with a section for notes to myself).

getting transactions (mint)

It’s obviously a major pain to keep track of your transactions manually - either you have to fill in each one yourself as soon as you spend money, or you’ll have to somehow remember all of the important details for later. I’m a huge fan of Mint [1] for taking care of all of this for me - I just link my credit card accounts/Venmo to Mint, and Mint compiles all of my transactions together into one long list that can be easily exported as a .csv file.

Mint can sometimes mis-categorize some transactions (e.g. most things that show up as “fast food” aren’t), and sometimes I feel like I want more granularity. However, it’s much easier to let Mint remember all of my transactions than keeping track of them myself. You can also easily change the category for a transaction in Mint so that it’s correct moving forward.

Mint actually has its own charts and graphs that you can use, if you so choose. The interface isn’t the prettiest, but it gets the job done. If I were to start tracking my spending today, I’d probably start by trying to use only Mint, because it’s nice to have everything in one place. I personally haven’t done that since (1) I really like Excel, and (2) for situations where you pay for dinner and have someone else Venmo you back, you can’t (as far as I know) edit the amount of the transaction to reflect your share of the expense, which in turn means that (i) your summary charts will be a bit off, and (ii) when you’re looking at transactions, you’ll see paying for something and getting paid back on different lines, which can be confusing.

In any case, you should try things out for yourself to see what works best for you. A good system can’t just be easy-to-use, you have actually use it.

what’s next?

After you’ve established a solid understanding of where your money is going, you can set goals/targets/budgets for each category moving forward. I might say that I plan on spending $350 on food per month, which sounds reasonable based on the above table (I’m already spending about $400 monthly on eating out and groceries, so making sandwiches at home for lunch should be able to bridge the gap). That’ll be covered in another post (likely much, much later).

[1] Mint is owned by Intuit, which is the company that builds TurboTax. Seeing as they already have all of the information needed to file my taxes, I don’t really incur a marginal privacy risk using Mint. Mint is free because of advertising, so just expect that you’ll see a few on the platform if you start using it.