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Metus comments on Open thread, Dec. 1 - Dec. 7, 2014 - Less Wrong Discussion
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How do you track and control your spending? Disregarding financial privacy I started paying with card for everything which allows me to track where I do spend my money but not really on what. I find that I in general spend less than what I earn because spending money somehow hurts.
I have a spreadsheet in which I record every financial transaction, and enter all future transactions, estimated as necessary, out to a year ahead. Whenever I get a bank statement, credit card statement, or the like, I compare everything in it with the spreadsheet and correct things as necessary. I don't try to keep track of cash spent out of my pocket. I tried that once, but found it wasn't practical. The numbers would never add up and there would be no independent record to check them against.
One row of the spreadsheet computes my total financial assets, which I observe ticking upwards month by month.
I don't record in detail what I buy, only the money spent and where (which is a partial clue to what I bought). I'm sufficiently well off that I don't need to plan any of my expenditure in detail, only consider from time to time whether I want to direct X amount of my resources in the way I observe myself doing.
I spend less than I earn, because it seems to me that that is simply what one does, if one can, in a sensibly ordered life.
Congratulations, you're about a million times more organized than most people. Even my girlfriend isn't that particular - she records transactions, and has a dozen budget categories, but she doesn't predict a year out.
MoneyDashboard.com - links directly to my credit cards and bank accounts. I hear that the US equivalent is mint.com
My income is variable and hasn't been great lately. As a result, several months ago I flipped the "I'm poor!" switch that's been lingering in my brain since I was a student, and so I avoid almost all unnecessary spending(a small recreation budget is allowed, for sanity, but otherwise it's necessities and business expenses only). Every few months I review spending to see if there's any excessive categories, but my intuition has been pretty good.
And yeah, everything on plastic. Not even because of tracking, mostly because Visa gives me 1% cash back, which is a better bribe than anyone else offers.
Some cards will give you 1.5% back and I think I've seen an ad for a Citibank card that gives you 1% on purchase plus another 1% on payment.
Most of those have annual fees, though - I've done the math, my spending isn't high enough to justify them. My 1% card is free. Also, I have my credit card number memorized, so changing it would impose a fairly high annoyance burden on me. But it's worth noting for those who have higher spending patterns than I do(~$1000-1500/month on credit).
Nope.
Here is the 1.5% Capital One card.
Here is the 2% Citi card.
For clarity, I'm in Canada. All the card offers I've seen up here that are meaningfully better than 1% have fees. Americans can take note of those, though.
Ah. Sorry for my presumption.
I did a rough estimation of my normal monthly costs of living and then added a small amount for fun. The rest of my monthly paycheck gets semi-automatically invested in ETFs and can't be used without transaction costs. I have a small buffer account that I can use for unexpected expenses and if this happens I'll be aware of it the next month and try to spend less and grow the buffer account.
Once you have a few thousand socked away, remember to start investing and picking up your free money.