For most of my 20s, I didn’t give a shit about money. I worked a bunch of odd jobs, went to school (a lot), and travelled as much as possible. Money was just something that came and went. Never spent much time thinking about it.
But as my decade of ‘what, me worry?’ drew to a close, a switch flipped in my head. I graduated from the roommate life, got into a serious relationship, and started building a career. Well on my way to adulthood, I was.
But one thing didn’t follow suit: my money habits.
I found myself still going from cheque to cheque, my savings account was more like a chequing account, and I had a bad case of the debts. Despite repeated attempts at building a budget, the needle simply wasn’t moving and I didn’t understand why.
Then, a game changer: What is Your Money Telling You, by Joe Barbieri.
This baby is loaded with gems, but the one thing that stuck with me was the part about ditching your budget and tracking your spending instead. Joe argues that budgeting can make you feel like you’re progressing, but unless you truly understand your spending habits, it’s just wishful thinking. Kind of like trying to diagnose an engine problem without looking under the hood. Instead, what you should be doing is the tedious work of tracking every cent you spend. EVERY. DAMN. CENT.
And so I did. After over 3 years of (painful) expense tracking, here’s what I learned:
Patience, the virtue: In Joe’s book, he explains how fixing your finances is like turning a ship around. It won’t happen right away. The ship has momentum — it’s heading in a certain direction. So are your money habits. But you have to start somewhere, so you ease off the gas and slowly start turning the wheel. You’ll encounter resistance, but eventually the boat will start to turn, and before you know it, you’ll be heading in a different direction. So be patient, captain. You’ll get there.
Judge not: For the first, say, 6 months, don’t judge a thing. And while you’re at it, don’t change a thing. Just observe. Where does your money go each month? You’ll probably be surprised. There’s plenty of time to critique later — but this is the first and most important step in tracking.
Don’t automate: Let’s keep this DIY, shall we? The point of this exercise isn’t to automate one more part of your life — it’s to automate one less. So instead of using some app that adds your purchases to a synced dashboard, just keep the damn receipts and spend 5 mins at the end of each day actually thinking about what you bought. Tracking is like mindfulness meditation for your money. It’s about becoming aware of what you’re already doing.
An honest dollar: Be painfully honest. Did you cave and grab that $8 pint? Pick up one for your buddy, too? How generous. Add it to the tracker! And don’t forget the tip. Did you splash out on a $10 gourmet sandwich for lunch? Sounds delicious. Track it! Or did you have one of those rare buy-nothing days? Make note of that too. Tracking your spending is painful as hell, so don’t forget to celebrate the small wins.
Things add up: No news here. Small leaks, over a long period of time, can sink the boat. Remember, don’t judge at first; but eventually you’ll notice the leaks you can plug without much effort. For my wife and I, the biggie was meals out. Nothing adds up like an appie, two entrees, and a tip. Nothing.
No fun governing: Above point notwithstanding, expense tracking isn’t about depriving yourself of the things you love. It’s about being aware of them — how often you do them, what they cost — and prioritizing them. If it’s important enough, keep doing it; just be more selective about what makes the cut.
Monthly and weekly: I recommend keeping your weekly costs (i.e. food, trips, clothes, misc, etc.) separate from your fixed monthly costs (rent, phone bills, transit pass, etc.). Because most fixed costs are, well, fixed, it can be hard to reduce them, but not impossible. Consider things like changing phone plans or finding cheaper car insurance.
The goal for weekly spending, on the other hand, is to get a sense of your average costs and to bring them down over time. Remember, observe first, then look to make changes. You’ll quickly notice small things you can cut back on. Here’s the template I use with some sample numbers to give you a sense of how it works. Nothing fancy, but it does the job.
If, after all of that, you’re still set on making a budget, go for it. Just remember that without a solid understanding of your spending habits, it’ll be hard to plug the holes or steer the ship.