How much time do you spend budgeting and tracking spending?

September 14, 2011 5:09 PM

How much time do you spend each week or month budgeting, tracking spending, thinking about your money, paying bills, etc.? These are tasks that I hate, and I , therefore, do not dedicate enough time to do them. Right now money comes in (paychecks are automatically deposited into my checking and savings accounts) and money goes out (bills are paid automatically by my banks and I spend cash and use my debit card). However, I'm not tracking everything I spend (I know that I should be), and I'm not budgeting for the future. I have a (very) small savings, but basically live paycheck to paycheck. I know that tracking spending and budgeting are the way out of this trap, but I'm loathe to get started (again--I've tried before), because of how much time I anticipate it will take. If you are tracking spending and budgeting on a regular (weekly?) basis, how much time does this activity take in order to have a clear picture of your finances and adequately plan for the future? Thanks in advance for your replies.
posted by buddylove to work & money (21 answers total)

Admittedly, I have a system in place, so I'm just monitoring something that ticks along almost entirely on its own. But I'd anticipate I spent about an hour a month, total, spread over the entire month - I check mint.com every couple of days to see how much money I've spent recently (eg, can I afford that shiny toy); I take a few minutes a couple of times a month to pay the bills that aren't totally automated. That's all. Nearly all of my finances run in the background: I get paid, my bills go out, and a big chunk is yanked into my online savings account where I don't even see it, so I'm not tempted to spend it. It's very, very easy and takes up so little time that I had to think about it real hard to be able to answer this question; my gut reaction is to say "no time at all!"
posted by Tomorrowful at 5:16 PM on September 14, 2011 [2 favorites]

My partner uses Mint to track spending into categories. I don't think he has to put too much time into this now, as he has it all set up. Electronic account tracking does a lot to automate this, as well.
posted by Blazecock Pileon at 5:17 PM on September 14, 2011 [1 favorite]

I'm a huge nerd who actually enjoys budgeting and tracking my spending, so I do it almost every day... but it only takes me about 5 minutes a day. It took awhile to set up initially, but the maintenance is very minimal.
posted by barney_sap at 5:19 PM on September 14, 2011 [2 favorites]

I agree that the mint budgeting facility is pretty helpful towards this end; you can see how much you have spent in the various categories in the past, dial that back a bit, and then make that your monthly target. Log in every few days to check how you're doing, and adjust spending accordingly.

Something else I do, that is more controversial, is give myself a certain allowance each month to spend on absolutely anything and then not worry about random purchases up to that amount. I say this is controversial because some people insist that you must track every dollar to get a true idea of where your money is going, but I say there are not enough hours in the day. As long as you are staying within the budget, don't sweat the small stuff.
posted by rkent at 5:42 PM on September 14, 2011

For several years I hand-entered transactions in Quicken and used a separate spreadsheet for budgeting. I probably spent a few hours a month, mostly processing an ugly pile of receipts all at once. It worked, but it was no fun.

After testing several alternatives I recently switched to YNAB, which replaces both Quicken and my old spreadsheet, and is simpler and more pleasant to use. I also got the companion iPhone app, so I can enter transactions while I'm out instead of bringing home a pile of receipts or scribbling notes about small cash purchases. Each transaction takes a few moments to enter. My wife and I review the numbers and adjust the budget over dinner once a month.

Any system is going to require a chunk of learning curve / setup time at the start. After you've built a cash buffer you'll be able to automate a lot of the bill paying, which will ease things substantially. You're thinking of this as a time suck, but you're discounting the time you now spend on your paycheck-to-paycheck balancing act & crisis management. On balance, you're going to save time.

These are tasks that I hate

How do you know you hate them if you don't do them? Once you get your bearings and take control, you may be surprised at how your feelings about this stuff shift.
posted by jon1270 at 5:46 PM on September 14, 2011 [2 favorites]

I think living paycheck to paycheck is far more of a concern than tracking everything.

You will probably need to track if you are spending more than you have and need to readjust your habits, otherwise I'd suggest just starting an easy and automatic savings plan and you'll probably naturally spend what's left and no more.

My savings plan took 2 minutes to set up, and I only look at it to enjoy watching it grow. Direct deposit into an ING account or something - either from your paycheck or checking account. Just choose an amount that seems manageable (10% maybe) and your goal is a few months of emergency funding.
posted by rainydayfilms at 5:54 PM on September 14, 2011

I'd say no more than a couple hours a month, and most of the time a lot less. I don't like to pay many bills automatically (I want to see what goes in and out), but logging into my bills' sites to make a payment only takes a second as I've set up a folder of bookmarks for them in my browser. I have a spreadsheet that I track when everything is due and how much I owe and I've paid. Since I'm paid by my work weekly, once per week I go in, look at my spreadsheet, pay what needs to be paid, and I'm done.

I use mint to keep closer daily track, as it's handy to have it on my phone, but I don't look at it every day. I have my savings accounts payments automated, so I try hard not to think about them so they stay untouched. Granted, I only pay something like 14 things per month. It's not exactly burdensome. And I have a few things automated besides my savings accounts, like the newspaper, Netflix, things like that. My retirement savings is all handled by work, so I do little there other than monitor it.

Honestly, it will take a little time when you first set it up. Devote a couple hours the first week, then make some adjustments for the first month. Use payday as the day you do your budget work, so you remember to do it. Once you're set up the time will lessen considerably.

You might consider budgeting a little time to learn more about money, too, rather than just doing your budget. Read some good money blogs, meet with a financial adviser, attend some work-sponsored financial tips groups, whatever. Doesn't have to be a lot, but it's the best thing you can do for yourself after exercising and eating right.
posted by clone boulevard at 5:58 PM on September 14, 2011

I spent very little time on it when I went to a cash budget for everything that wasn't a fixed recurring cost. So I figured out how much I could spend on food, eating out, and fun per pay check and took it out of an atm on payday. If I had money in my wallet, I could go buy things/do stuff/etc. If not, I had to do something free and eat what was in the apartment. It was the only way I could live under a budget.
posted by advicepig at 5:59 PM on September 14, 2011

I'm fussy about my money and even so I probably spend maybe an hour or two a week making sure things line up, opening mail and all the other stuff. I find that a lot of times getting yourself to do a noxious task can be assisted with finding something else you like that will motivate you. So what if you have an hour to "do money things" but at the same time you eat some food you really like or watch your favorite tv show afterwards or drink your favorite beer? The biggest problem with money management stuff isn't that it takes veyr long to do [I bet you could do a lot of this in 10-15 minutes a day, once you have systems in place] but the continual avoidance makes the tasks seem never ending because you're spending a TON of time sort of talking yourself out of it. So here's what I'd do

- set up Mint to track your non-cash money
- get a phone app or even a piece of paper to track your cash expenditures
- spend 10 min a day entering those
- do this for a month
- spend 20-20 min at the end of the month saying "how did that go?" and see what you notice, if anything
- pay special attention to "avoidable" costs like late fees, interest payments and other things that better habits would help curtail
- make new goals for next month, trying to make incremental improvements
- repeat

You don't even have to make a budget per se if you can say "I drink way too much beer" or "I eay way too many Big Macs" and just try to reign that in. Personally, I can't manage budgets, but I can stay on top of my spending and see that it lines up with my income and see if there are places where I can improve. Small steps and achievable goals in less time than it takes to take a shower. You can do it.
posted by jessamyn at 6:11 PM on September 14, 2011

I probably check out Mint a couple of times a week. It's part of my procrastination routine, like MeFi! I don't track every single thing, but I do automatically put a fixed amount in savings every month. I also use targeted savings accounts for big-ticket items like vacation, a new phone, a new camera. I have not balanced my checkbook in 10 years at least.

Tracking every penny of your spending works for a lot of people, and it might even be the Best Way, but it doesn't really work for me. I like the Balanced Money Formula model - 50% of your income goes for necessary/fixed expenses, 20% for savings, and 30% for everything else. Automatically put the savings part into savings, pay those necessary expenses first thing, and then the rest of the money is yours to blow on whatever you want! The only hard part about this is learning to not raid your savings account when you realize you've blown all your fun money on crap and you can't afford to go on vacation or whatever.

If that sounds like too much work (figuring out your fixed expenses, etc.) just start automatically transferring some amount every month (or even every week) into an account that you won't raid without a good reason. Even if it's just $50 a month (even if it's just $10), start with that. It probably won't hurt a bit, and then you can start raising the amount you're saving. Pretend like you never got that money at all. You'll be forming a good habit.
posted by mskyle at 6:12 PM on September 14, 2011

If you have online banking, use your debit card for absolutely every purchase over the course of a month and you won't have to manually track your spending. You can just log onto the website and look at the line items on your account detail page. (I'm assuming most banks offer such a thing, yes? I've only used two different banks but both had the line item feature.)
posted by Serene Empress Dork at 6:25 PM on September 14, 2011

I'm going to plug the book
I Will Teach You To Be Rich by Ramit Sethi
(Actually, since Ramit is a relentless self-promoter, I'll let him speak for himself by linking to His web site)

If you read one chapter in the book, read chapter 4 on 'conscious spending'.
posted by itheearl at 6:25 PM on September 14, 2011

...and just to make sure i've directly addressed your question...
You basically just focus on what you really enjoy, and then automate your bank accounts so that they move money around to different accounts earmarked for spending on things you really enjoy.
When you spend money from one of these earmarked pools of money, you don't have to feel guilty about it.
The first couple months will require a bit of tweaking to make sure your estimates of your spending are realistic, but after that it's just a matter of checking in once or twice a week to make sure you're still on track.
posted by itheearl at 6:35 PM on September 14, 2011

Lifehacker recently touted a new tool, Birdy, that lets you record your purchases via email.

More to your point: I'm poor so I spend a lot of time agonizing over where my money goes, but it really takes me only a few minutes each month to track my expenses. I started a spreadsheet a few years ago on which I list every single thing I spent money on that day; that took maybe ten minutes to set up? And now it's pretty painless to update it every evening before going to bed -- a few minutes, tops. A side bonus is that because I categorize my purchases (food, clothing, car stuff, etc) -- it also serves as a casual, consumerist-centric diary of my activities, which I can now track over several years.

About a week before each new month begins, I look over the spreadsheet and try to figure out my budget. But once you get a handle on your spending habits, you'll find that the budget line items don't really change -- and after a year, you'll be better able to anticipate things like needing a new jacket in the winter, or getting oil changes for your car.

Automatic savings is a great idea, as it will curb your spending by default, and give you a nice emergency fund for unexpected expenses.

In the end, it's way more painless to spend a few minutes of planning like this, than to find myself short at the end of the month and losing nights of sleep over it!
posted by estherbester at 10:56 PM on September 14, 2011

I spend essentially no time at all on them (I mean, I do occasionally think about money).

This is how my system works:
1) direct deposit paychecks (auto-funds 401k, too).
2) automatically pay all bills.
3) Automatically pay savings account.
4) Spend whatever's leftover on whatever I want.

You don't need to track spending if you've met all your goals before you even get to that point. Step three is key (and the parenthesized part of step 1).

Also key is that I don't have credit cards or other revolving debt to worry about. If I did, I would still just auto-pay those in step 2 at an accelerated rate instead of doing step three, and then when they were paid off, switch to auto-funding a savings account.

How much money you make and how much your expenses are also come into play here.
posted by tylerkaraszewski at 11:15 PM on September 14, 2011 [1 favorite]

I track all purchases for both my husband and I. It takes maybe 2 minutes a day (I use YNAB). If you spend mostly with a credit card you can put it off a few days and then it will take 5 minutes every 3 or 4 days, but every day you put it off is a day that you have to forget what you spent money on. I reconcile the debit card spendings about once every week and a half or two weeks, which takes another couple minutes, and the credit card once a month (because we have a caveman-era credit card that has no online transaction history and we only get the transaction list with the bill once a month). We don't really buy that many things, so entry really only takes as long as it takes to type in 2 to 4 transactions a day, which isn't very long. Some bills happen automatically, some happen when I'm doing the reconciling. Once a month (when the paycheck arrives), I consider next month's budget and enter it, and then I adjust it a tiny bit at the beginning of the next month. That maybe takes 10 minutes.

YNAB focuses more on what you have now and is not concerned with forecasting and future earnings at all, but it does encourage considering and saving for future expenditures. It really only gets hard if you forget/put off putting in transactions for a week or so.

Before I used a hand-entry spreadsheet with very broad categories and just totaled items in one box per month. I did this during downtime at work, which worked out pretty well for me.
posted by that girl at 1:13 AM on September 15, 2011

Well, I'm fundamentally a lazy person, I get bored by my finances and I have never found the need to actually maintain a detailed record of every penny I spend. And I don't think you need to do that on an ongoing basis - others will disagree.

But you do need to get a good handle on your money overall and one way to do it would be this. Set aside at least half a day, in the near future and:

- analyse your spending in the last couple of months, including stuff you pay in cash - be as detailed as possible - small stuff like a daily Starbucks visit do add up over the course of the month. If you don't normally keep all your receipts start to keep them religiously for a while to allow you to do this.

- go through your bank and card statements for the last 12 months and identify any one off/quarterly payments not captured by the above analysis (insurance premiums, car maintenance or repairs, road tax or utilities for example)

- use this information to do yourself an annual budget - just slot income and expense categories (per your analysis) in rows, extrapolate for 12 months, including you the one off/quarterly payments, slot in your monthly income in the top row and work out the difference. Work out the annual difference, too.

In order to build up savings you need a positive figure at the bottom, i.e. income less expenses leaves you with spare income , at least over the course of 12 months. By the sound of it your figure at the moment will roughly zero.

You can do this on a piece of paper if you don't like spreadsheets - a spreadsheet has the advantage that you can play 'what if' more easily and make changes and see their impact immediately.

This allows you to do two things:
1/ You can add up all your annual/quarterly costs, round the figure up to allow for costs going up/for anything you've missed and divide by 12. This amount is your minimum 'savings' to spread the cash flows evenly over the course of the year. So the annual car insurance premium payment is budgeted for every month and you don't need to use the insurer's expensive finance option to spread it for you. This should mean you won't ever have to dip into your overdraft facility (if you have one) for example. Problem is you still are living from pay check to pay check.

2/ So you still need to work out how much money you want to save on a monthly basis to build up some savings that are actual savings. Using your detailed analysis you should be able to work out what costs you can cut out easily to achieve it. See point re Starbucks above. After cutting out all the easy stuff my next step would be to work out if my utility costs are reasonable or not and what else you can get a new quote for to save money easily without feeling the pain. Then you look at what things are least painful to cut out...you see where I'm going with this. Play with it until you have identified enough costs to cut out to cover your savings goal.

Then you implement your savings goal. You set up a standing order which transfers the total of amounts in point 1 + 2 above into your savings account on payday. You are only allowed to transfer money out of the savings account for the bills identified in point one. The rest stays in the savings account. You are not allowed to spend more money than you have in your checking account, ever. If that means you eat only beans on toast for the last week of the month and watch tv because you haven't money to go out hat's what you do.

If you are thorough when you do this and implement conscientiously you won't have to touch it again unless stuff changes, i.e. your income changes, your rent goes up or whatever and thus the figures need to change as a result. Then you work out how much your figures need to change and change the monthly standing order into your savings account accordingly.

So in answer to your question - spend a few hours to actually work out what the status quo is in terms of spending and what it needs to be to allow you to meet your savings goal and then revisit periodically.
posted by koahiatamadl at 1:21 AM on September 15, 2011

I have two google spreadsheets - one for my monthly budget and one for my overall debt/financial goals (I have a lot of student loan debt). I spend about 5 minutes a day on the monthly budget, and maybe 15 minutes a month thinking about my overall debt and financial goals. The thing with saving money and managing debt is that time is really of the essence if you want to maximize the net money you end up with in the end. Meaning interest will compound on your savings accounts as well as your debts. So it really is quite important to start doing this as soon as you can possibly make yourself.
posted by corn_bread at 5:22 AM on September 15, 2011

Just popped in to nth Mint. I used to hate this stuff, but having a little app on my phone makes it almost a game. The program is pretty smart, too, and will figure out a lot of stuff for you (like categories, or which payments are bills). The initial setup took maybe an hour and now the longest I ever spend on it is 10 minutes.
posted by fiercecupcake at 7:48 AM on September 15, 2011

I set aside one hour a month for 'financial review', where I reconcile various accounts. It's actually pretty quick and easy; most of my transactions are on a credit card with a decent banking API. I pull up my finances at other times in the month, but that's mainly because I'm working on selling a bunch of video games and optimizing investments and taxes, or figuring out if I can loan money to family, etc.

As a lot of people are pointing out, your challenge isn't the ongoing maintenance, but the initial setup. You'll need to set up categories or books, and classify some amount of history. mint.com pretty much requires that you let them handle the automation. I use GNUCash because I'm a Linux nerd and banking security paranoid, and it does a decent job for me now that I've given it enough data by manually classifying things.

I know that tracking spending and budgeting are the way out of this trap

Budgeting isn't magic. Basically there's two kinds of scenarios: overpaying and underconsuming. Everyone figures the solution is underconsuming, ie no more Starbucks ever, when especially for people who hate budgeting, there's a good chance you're probably overpaying for something. For your biggest expenses, comparison shopping makes a hell of a lot of sense. It cut my mom's car insurance in half, and it was the fourth quote that did it. The other common overpaying story is overdraft fees. Paying even 5 dollars to effectively borrow a hundred dollars for a day is clearly a worse deal than borrowing on a credit card at 29.99 percent.

How much time does this activity take in order to have a clear picture of your finances and adequately plan for the future?

I'd say about two hours with good software. Probably less if you follow koahiatamadl's guide, which is roughly how I big picture budget. But for people without three month's expenses in their checking account, a short term plan of action is called for. What I do is set up recurring transactions, and have them show up on the day they're planned for 30 days in advance. Paychecks, rent, utilities, loan payments, the more you can automate the better. Transaction history helps you figure out how much and how often, and the recurring transaction sets up 90 percent of 'the plan'. I use savings and credit to smooth the bumps in the plan, when annual expenses double or triple up.
posted by pwnguin at 1:42 PM on September 15, 2011

Just echoing the idea that you don't HAVE to track any more than you want to track.

I think your ultimate goal here is "have more savings and plan for the future". Tracking is just a tool to help you get there. You may be able to do that without tracking anything other than how much money you're putting into savings. As Jessamyn said, if you know you're overspending on beer or clothes or movies, you can make a decision to cut back on that category and put that overspending into savings instead, without having to track exactly how much you're spending on that category (or any other category).

Tracking just helps you figure out where you CAN cut spending, if you don't have an obvious place to cut back.

It also helps you know what you're likely to spend in the future, but you may already have a good sense of that. ("I bring home $x after taxes; at the end of the year, it's basically gone; therefore, I'm currently spending about $x a year.")

You probably already know what your biggest expenses are (rent? insurance? groceries?). Do the big obvious things account for most of your spending, or do you find you're blowing through your paycheck with no idea where it went? If you don't feel like you know where you're money's going, simply tracking the past year's spending can tell you that - but you don't HAVE to track everything going forward. If you realize you're spending $1000 a month on comic books and you had no idea it was that much, you can just give yourself a $200 a month comic book budget and pop the rest into savings. Without tracking anything else, you've just moved closer to your goal.

Good luck - you can do this, and it'll be much less painful than you think!
posted by kristi at 11:54 AM on September 16, 2011