Never Ask Again: Where Does All the Money Go?

Experts are always telling us that to get a handle on our spending we must our record our expenses.

But who wants to fiddle with devising a system or learning complicated software?

With this low-tech but high-functioning chart, all you have to do is click print.

I created a version of this chart in my first months of marriage when it seemed as if our money was being sucked into a black hole. We’ve been using it every month since. (For anyone who prefers my original black-and-white version, you can still print it here.)

When we first started, I had to keep reminding my husband to write down anything he spent — from cappuccino to bus fare.  But he got used to it, and now he reminds me!

We have been tracking our daily spending for ten years.  It’s fascinating to see our pennies roll into the little compartments, and it has changed the way we think and behave about spending.

How the Daily Spending Sheet Works

• Print several sheets.
• Hang one each month in a central place, like your fridge.
• Every day when you get home, write down anything you’ve spent.
• Figure out where you stand in the Summary table:  earnings – spending = balance. (Carry over last month’s balance if you want.)

Why Paper?

It’s fun to fill in the boxes. I guess writing in those tiny numbers satisfies a craving for organization. Or the need to make life understandable. Even adding everything up with a calculator at the end of the month is an exciting little moment: how much did we spend?

You can buy software or subscribe to online budgeting programs, but I think there is a lot to love about this simple pencil-and-paper method:

• Get started immediately, without having to wade through and learn a bunch of software options
• No procrastinating — all you have to do is jot down a number or two
• Reduce clutter, since you don’t have to go through receipts or get distracted by windows popping up on your computer
• Remember to do it, because your chart is posted in a prominent place
• See the whole month at a glance without scrolling through confusing screens of graphs and tables

Even personal finance experts, like Judy Lawrence of The Budget Kit, agree that the manual approach is part of the learning experience:

“As you physically write down the numbers and visually note them and the surrounding information, there is a special sensory awareness and understanding that occurs.”

Once you experience the overall concept and understand how day-to-day spending fits into the big picture, then transitioning to an electronic system is fine if you want to. But I’m still happy with my pencil and paper.

Category by Category

This printable chart has enough categories to encompass most any expense, yet not too many to make it overwhelming.

When my husband and I need to get more specific about an expense, we just scribble a key word next to the cost like “school donation” or “new glasses.”  This helps us remember larger expenses at the end-of-the-month reckoning.

Here is how you can use the categories to record your expenses:

Savings:  At the top, because if you pay yourself first, you won’t be left at the end of the month with nothing for your long-term goals. Consider a monthly automatic transfer to a targeted savings account.

Mortgage/Rent:  Ours also includes homeowners/renters insurance as well as property taxes, but you could separate these out to Taxes and Insurance if you want.

Household: Anything you need for your house (from furniture to cleaning supplies to repairs).

Utilities:  Electric, gas, oil, water, garbage, sewer, etc. (Jot down the specific expense next to the number if you want.)

Grocery: If you’re really serious about this, you can separate out non-food items into other categories like Personal Care or Household.

Meals Out: Everything from Starbucks to the ice cream man.

Auto/Transit: Car expenses (gas, repairs, insurance) or public transportation costs.

Child/Eldercare: Babysitters, daycare, preschool, summer camp; or any costs associated with caring for elders.

Pets: Food, supplies, vets, daycare, kennel, walkers, etc.

Education: Classes, tuition, kids’ school, professional development, educational books, association dues.

Office: Office supplies, computer stuff, and postage. You could also include business expenses here.

Telecom: Internet access, landline, mobile phone. If you want to separate, you could include cable under Recreation.

Medical: Doctor and dentist visits, medications, healthcare insurance.

Personal Care:  Everyday stuff like toothpaste and soap to occasional expenses like hair, makeup, and spa visits.

Clothes: Plus shoes, coats, and accessories like jewelry, as well as dry cleaning and tailoring costs.

Toys/Gear:  Can also include hobbies and sports equipment.

Recreation: From zoo passes to movie tickets, magazine subscriptions to pool membership.

Trips: Vacations, business travel, airline tickets.

Gifts/Donations: Presents and cards, as well as charitable giving.

Insurance: Life and disability. Car, health, and home insurance can also go here if you want to separate them out.

Bank Fees: Interest charges and any other banking fees.

Taxes: Income, property, vehicle, and any weird taxes I haven’t thought of.

Other: You should rarely have anything that doesn’t fit in the above categories, but just in case.

What Can You Learn?

Besides being able to explain how your paycheck flies out the door, you’ll also see if you are spending on what’s important to you. Or what’s just convenient or fun. Once you have figured out what you really want out of life (your long-term financial goals), then you’ll be able to make sure more money goes to that, and less to unimportant things.

Here are just a few of the benefits of keeping a daily budget:

Nothing Brushed Under the Rug. It’s not so easy to “forget” incidental spending or blow off small expenses when you know you’ll have to expose them to the florescent light of your kitchen when you get home.

Accountability & Teamwork. With a shared family budget, you can’t sneak a forbidden purchase (without having to lie about it).  Since your partner is held to the same standards, you increase the sense of being on the journey together.

Your Family’s Operating Costs. After three to six months, you’ll have an idea of what you spend on-average per month.  This is really useful if you are wondering about changing jobs, moving to a new city, or how much you need to save for an emergency fund.

Expect the Unexpected. We found that, even if we were doing well in day-to-day spending, we were hit by a large irregular expense almost every month:  some weird tax, a trip, a broken dishwasher.  It’s a bummer, but it’s life. Now we expect unusual expenses, instead of being surprised by them.

How Much to Cut Down. If you are in the red every month, you’ll know how much you need to reduce to break even.  If you are ready to put money toward a goal, you’ll know how much you can set aside and how long it will take you to reach your savings goal.

Where You Can Trim Fat. Knowing where your money goes makes it easier to pinpoint areas to streamline.  You can save huge amounts of money — and have fun doing it — if you treat saving money as a challenge. Keeping your long-term goals in mind, as well as not completely depriving yourself, will help you stay on track and enjoy the process.

What Next?

The beauty of budgeting is that, once you have started to cut down, you can see your savings in black and white.

Keep your completed monthly budgets in a file folder.  At the end of the year, total up your monthly spending to find out how much you spend per year, how much you earn, and how much your yearly expenses are by category.

We have a thick manila folder in our file cabinet called Budget, with ten years of stapled monthly sheets.

I love seeing that fat folder: there’s something sentimental about it in a way that a computer file could never be. It’s a great economic history of our family –  and a window into where we’ve been and where we’re going.

Download the Daily Spending chart now, and let me know how you do!

You also might like:

1. New Daily Spending Form: Introducing a Prettier and Better Printable
2. Creating a Budget in 3 Easy Steps | Step One: Track Your Spending
3. Why Tracking Spending is Good For You
4. 15 Ways to Save Money and Be Green
5. This One Thing Will Make You Save Money and Achieve Your Dreams