Anyone on the road to Financial Freedom has probably read a book or two that advises to 'track every penny you spend'. I have read countless financial books and I've come across this advice numerous times. I always start out tracking my daily spending, but eventually stop because I can't keep up with all of the scraps of paper and/or pocket notebooks I have scribbled tallies on. Well, now I am reading the book, 'Your Money or Your Life' and it challenges the reader to track every penny, EVERY penny. If you find a quarter on the sidewalk, it must be recorded; lose fifty cents in a vending machine, it must be recorded also.
Because I was committed to fully following the 9 steps of the book, I decided if I was going to keep such detailed account of EVERY cent that passes through my hands, I had better find a better method than my previous attempts. So, I scoured the Internet searching for better methods/suggestions. There were the usual suggestions of pocket notebooks (tried and failed, I switch handbags almost everyday); Quicken and other programs (which is fine to transfer amounts at the end of the day, but what about during the day?) and other typical suggestions. But the method that stood out to me and, consequently, has worked for me was the very simple use of a Transaction Ledger from your checkbook.
This method is so simple, yet I had never thought of it. You simply get an extra checkbook register and instead of using the entries to balance your checkbook, you can date each transaction and tally whatever was spent for each item purchased. This method is great for me because I no longer have to balance my checking account because my paycheck is direct deposit and the only transactions are bills, which are automatic draft. So, I am able to keep my transaction ledger in my wallet and pull it out as needed for recording.
Another benefit to this method is I don't have to encounter all of the questions about what I'm calculating when I go to restaurants/activities with friends. Everyone just assumes I'm recording bank transactions, despite the fact I usualy don't use a debit card or check. It really cuts down on all of the 'penny pinching' comments.
This method gives me everything I need and there is no need to keep up with a notebook or scraps of paper because the register remains in my wallet.
What method do you use to track daily spending, do you find it to be efficient?
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I can't tell you how revealing it is to track your money and see where you're seriously throwing money away.
For me it was eating out all the time that was wrecking havoc on my finances as well as heavy vending machine use.
I currently use an expense tracker on my iPhone that lets me easily track all my expenses.