Does Tracking Your Expenses Help You Save Money? Not Really.
During my early days of discovering money, one of the common pieces of advice I would read/hear was “have a budget/track your expenses”. I’m going to go against the status quo here and tell you that tracking your expenses may not really help you save money.
Actually – for the sake of clarity, let me define clearly what I’m actually referring to.
A budget is technically having a set amount of money to spend per day/week/month – but it is commonly used interchangeably with “tracking your expenses” – which I would argue, is technically not a budget.
I’m referring to tracking your expenses. Does tracking expenses help you save money? It can but it really depends. In short, if tracking your expenses causes you to change your behaviour/habits, then yes, it does help.
I tracked my expenses for a few years, over 10 years ago I stopped because I found that it was not affecting my behaviour. What this basically means is, at the time I was tracking my expenses, it certainly gave me some insight into what I was spending on and how much, but I was already such a minimalist that it wasn’t really realistic to be able to further reduce. This doesn’t mean that it absolutely wasn’t possible to cut more out. It means I was not willing to.
Everyone has hobbies and “non-negotiables”, also known as non-discretionary spend. A lot of us have common non-discretionary expenditures – think water, shelter, food. An example of a more personal type of non-discretionary expenditure of mine is football. I pay $10/session and it’s money that I’m willing to spend, so even though I could hypothetically cut it out, I am not willing to.
If you don’t live a minimalistic life, you actually probably already know what you can and can’t cut out. For some people, this might involve fine dining once a fortnight. If you are willing to cut this down or reduce this further, to, for example, once per month, that would be a reasonably straightforward way to reduce this bucket of expenditure. The question is: are you willing to? If you are not, then there is really no point in tracking your expenditure.
If tracking your expenditure is likely to cause you to become surprised by what you spend on, and how much you spend on what you spend on, and by extension, result in a change in behaviour, then absolutely – tracking your expenditure is a good thing and you should be doing it. It is likely that after doing it for some time, you’ll probably have figured out what you do and don’t want to keep spending on so you don’t really have to keep tracking expenses forever.
If you’re like me, and you’re already pretty bare bones as it is, or you’ve got numerous things that you’re really not willing to cut down on anyway, then it’s kind of pointless. If it’s not going to change your behaivour, then your time investment in tracking your expenses is really not helping you save money.
The whole point of tracking your expenses is to give yourself some insight/data, to give you a better overview of how you spend your money. If the insight/data is not going to give you any new information, there’s probably no need to do it.