One Budgeting Tip that Makes Budgeting Easier than Vacationing

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Record it immediately.

Yep, that’s my tip.

Over the last year, I’ve been frustrated at how poorly I’ve been keeping records and budgets.  I guess I do have an excuse.  In 2012, we visited 10 different countries and traveled for four months after moving away from PNG.  It’s hard to keep track of all your receipts when your geographic location is constantly changing.  I have about a hundred places where I’ve been storing old receipts.  When we finally set time to enter our receipts, we’ve been overwhelmed by the process.

However, a few weeks ago, I discovered a way to keep track of our budget.  It’s so easy that I can’t believe we didn’t start it sooner.

Budgeting using your Smart Phone and recording the expense immediately.  

I’ve tried out several apps for keeping track of personal expenses, but my current favorite is Toshl Finance.

I like the app because of its simplicity.  At the end of the day, I don’t really care if I spent my $65 on groceries at Sam’s Club or Albertsons.  Since I’m tracking my spending immediately, all I need to enter is the amount and the tag.  It takes all of 10-15 seconds per transaction.  With that app, we also have the ability to export our expenses in CSV format if we deem it necessary to dig deeper into our expenses.

Other recommended Budgeting Apps:

  1. YNAB – this is a free app if you use the YNAB budgeting software.
  2. Mint to be used in conjunction with your Mint.com account
  3. Personal Capital to be used in conjunction with your Personal Capital account
  4. Easy Envelope Budget Aid
  5. Pocket Expense Personal Finance Account Tracker
I think the goal is to find an app that does exactly what you need and no more.  The less work you need to do, the more likely you are to be successful.

How to Create a New Budgeting Habit that Sticks

In January, I read (actually, I listened to the audio book) The Power of Habit: Why We Do What We Do in Life and Business.  I highly recommend the book.   In order to form a new habit, you must give heed to the order of habit formation:

  1. Cue
  2. Routine
  3. Reward

New habits need some sort of a cue that will serve as a trigger for your mind.  Of course, cues are easier if they are routine.  As an example, one cue I started using is putting my running shoes by my door.  I exercise when I finish work, so when I see those shoes it triggers my mind to think about exercise.  For budgeting, the cue is opening my wallet and opening my 1Password program on the computer.  When I’m getting cash, a debit card, or usually a credit card out of my wallet, that is the cue that I’m going to need to record an expense.  When I open my 1Password program, my mind is triggered to be aware if I’m spending money online with a credit card.  It’s already becoming a routine.  If I purchase something online, as soon as I make the transaction I enter it into the phone.  If I’m shopping at a store, I enter it into the phone before driving away from the store.  For me, the reward is the satisfaction in knowing that I’m keeping a good budget and being a good steward.

The system has been working really well for us.

But, my wife doesn’t have a smart phone …

Since my wife’s phone isn’t as intelligent as mine, she sends me a text any time she spends money.  As soon as I get the text, that is my cue to immediately enter the purchase into the budget.

What we’re doing with receipts now …

If we purchase non-potentially returnable items (i.e. groceries or gas), we just throw away the receipt.  However, anytime we purchase an item of clothing or other household item, we put the receipt in an envelope marked with the current month.  That way if we ever have issues that require a receipt, it’ll be easy to find.

By the way, for gas, we also record everything (gas purchases and maintenance) in the Gas Cubby app.  This way we can easily track our mileage and total vehicle costs.

It’s been so easy that I’m kind of frustrated it took so long to realize there is a very simple, yet effective way to budget.

If you’re having trouble keeping up with your budget, try a system that forces you to enter the expense the very moment you spend money.

Do you use your Smart Phone for budgeting?  Do you have a favorite app you want to suggest?  Do you have any additional tips?

Comments

  1. says

    I log in to my bank website as well as my credit card websites 4-5 times per week and log everything. This is along the same lines as what you’re advising. Doing so makes sure I that I track everything according to the category, it lets me spot any potential fraud transactions, and it also makes sure to let me know how much spending we’re done so that we don’t get surprised at the end of the month.

  2. says

    Good tip. It also works well for some chores. Rather than letting the dishes build up in the sink, wash the two or three things you have, dry them, and put them away. Many chores are more easily done in small parts that take just a few minutes rather than clumped together into an overwhelming hour.

  3. Monica says

    To be honest, I do not understand why so many people think that budgeting is a really difficult process. It is so not true. Well it might be a bit challenging but for just a few first days, then everything gets normal. When I started setting my budget (I simply needed to pay of my money loans) it was not that easy as I had to make some major spending cuts…but once I saw results everything stabilized. The budgeting tips you give here is priceless. I wish more people were able to understand the importance of staying frugal these days. Thanx for sharing this post

    • says

      Monica,
      Budgeting is like all of finances, easy to understand and hard to implement. Finances is about behavior not knowledge. As we develop healthy habits our finances will improve.

  4. says

    This blog is unique to me Craig as the concept of using my smartphone for budgeting never came to me earlier. I’ll surely try the Toshl app you mentioned. Thanks for this informative post.

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