The "I Knew It!" Benefit of Expense Tracking

Photo: Philip Brewer

It's worth tracking your spending because it's the only way to learn where your money is going. But it's worth doing for another reason as well. (See also: Track Your Spending. Or Not.)

Unless you're tracking your spending, you don't really know where your money is going. Not even if you know to the penny how much goes for your mortgage or rent payment, your car or student loan payment, your tuition payment, and all the other big bills in your life. That's because, as anyone who has ever tracked their spending can tell you, there's a lot of money in the small payments.

If you're not tracking your spending, you have no idea how much money is just leaking away in dribs and drabs, going for coffee shop coffees, fast food lunches, drinks with the boys, no-special-occasion gifts for that special someone, new gadgets, overages on data plans, pet food, lawn care products, vending machine snacks...

Getting a handle on that spending is the big reason to track it. But there's another reason — it's deeply affirming to confirm your sense that those big payments really are as big as they seem.

When I first started tracking my spending, I was only a little surprised to see that my biggest spending category was taxes. (And that was just federal income taxes, state income taxes, and FICA. I never drilled down to the level of breaking out sales tax, which would have added several percent to the tax category.)

My response, the first time I saw the pie chart with the biggest wedge being the one marked Taxes was, "I knew it!"

If you're one of the many readers working hard to pay off debt, seeing a big wedge of spending going toward debt repayment can be rewarding as well — all your effort and discipline reflected in a brightly-colored wedge. (This is true even though debt payment isn't really an expense.)

Those big wedges show what you're paying toward your most critical needs and most cherished wants. (Taxes being a special case — but surely staying out of prison is high on the list of needs and wants.)

Your spending should reflect your values. The big win of tracking your spending is that you can see whether it does or not. When you find a mismatch, you can adjust your spending to reflect what you really want.

That's a big win. But it may be an even bigger win when you find that there isn't a mismatch. It's great when you look at the top ten categories of spending and can say, "Yeah, I knew that. That's not only what I expected, it's just the way I think it ought to be."

There's real comfort in that.

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