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I will never understand why people spend time on expense tracking spreadsheets and apps. I mean, you’re the one spending money you already know what you spent

I will never understand why people spend time on expense tracking spreadsheets and apps. I mean, you’re the one spending money you already know what you spent it on... Your bank already has a history of transactions if you want to look at it. Put 30% of your income in a savings account, the money for necessary bills in another account with auto-billing, and the rest for spending in a spending account. I see so many people categorizing everything with spreadsheets and budget apps and I just ask myself... why? If you set aside savings and necessary expenses what’s the point of categorizing your spending?

echelon 6y ago
It's even easier if you don't spend at all. So many of the things we buy are temporary, ephemeral pleasures. I'm not saying don't invest in fun and experiences; life is short, and you should enjoy it. But picking up random things at Target and idly browsing Amazon might not be necessary. And might be keeping you working harder, longer. Cheap drinks are just as enjoyable as expensive ones. I've started putting money I would spend on stupid things into savings and investments. Nothing would be better than buying my freedom to work on whatever problems I want to 100% of the time. I've got mutual funds and growth stocks, but my favorite thing is my dividend stocks. I like watching those returns come in because I'm doing nothing to earn them. It feels magical and has helped curb the desire to buy anything I don't need. If I put it into an investment, the money works for me instead of me working for the system.
sanderjd 6y ago
It's because once I started doing it I found that I didn't actually know what I spent money on, not really. I found that my rough estimates for where my money was going were way off and lagged actual changes in my behavior by a number of months. Just as an example, I still don't feel like my family is spending close to double what we used to on groceries during the pandemic, but I know that we are because I have months of history to compare against. So then you could say, great, so you know that for sure now, so what? Well, this is actionable! Continuing with the example, now we can look at the upward trend in groceries and ask whether we're happy about that. Is it an overall upward trend, or is it coming from something else that we've deprioritized? In this case, yeah, it's pretty directly coming out of eating out and socializing, so not something we need to worry about. But in other cases it has provided data to inform hard decisions about where to cut. And that actionable trade off thing isn't even my favorite part! My favorite part is peace of mind when we buy stuff. I don't have to wonder whether we can afford things, we either have the money for it, or we can move money for it from some other thing we were gonna spend it on, or we just can't afford it. But there's no guesswork, which is so much more relaxing than what I used to do (guess and hope). Your mileage may vary, but for me, it's some of the best invested time I spend.
- alexmingoia 6y ago
  Do you put savings and necessary expenses aside when paid? To each their own. If it works for you great. I can’t imagine sitting down and tracking whether my grocery expenses fluctuated from one month to the next, since it can’t impact my ability to pay bills and save. If I was worried about not having money for groceries I would set that money aside when I get paid. I also have a family and am the sole income earner. I just set aside everybody's spending money / allowance and they can do with it as they wish.
  - sanderjd 6y ago
    Your system sounds simpler but more rigid than mine. In my system, everything is a negotiable trade off. There is not static bills and savings to set aside, there is a trade-off between those things and spending. If I want to spend more on groceries or socializing or vacations in some period of time, that is just a trade-off against all the other things in my budget. Maybe I'd rather find ways to lower my bills than my spending. Maybe I want to save less in some month so that I can spend more on something that will bring us more joy that month. It is easier to make these decisions on trade offs with good visibility into all spending and saving. But I would also suggest that it seems like you're actually doing the thing you said you don't understand why people do. You have a budget, it just has a relatively small number of categories. But the answer to your question is that people do this for the same reason that you do your setting aside of money for bills, savings, and spending.
fluffything 6y ago
> I see so many people categorizing everything with spreadsheets and budget apps and I just ask myself... why? I was saving 30% of my income per month, and wanted to save at least 50%. So I decided to measure my expending, and try to cut it off without actually impacting my quality of life. I discovered that substantial parts of my expending were going to: warm and cold water (2x the national avg per person), electricity bill, take-away food, transportation, health insurance. I changed all the water taps with ones with a lower volume rate "by default" (you have to go out of your way to open them to the max), replaced all bulbs with LEDs, decided to only go for take away once per week but get the nicest and most expensive one instead, bought a bike for commuting, and changed health insurance and electricity providers to similar ones, but much cheaper. Those were minimal changes in lifestyle that bumped my saving ratio from 30% to 60%. Without measuring, I would probably would have taken a bunch of random actions that would have impacted my lifestyle more, and not delivered such a big jump. I don't routinely use these apps, but if you want to continuously optimize your expending, measuring it is step 0.

echelon 6y ago

It's even easier if you don't spend at all. So many of the things we buy are temporary, ephemeral pleasures. I'm not saying don't invest in fun and experiences; life is short, and you should enjoy it. But picking up random things at Target and idly browsing Amazon might not be necessary. And might be keeping you working harder, longer. Cheap drinks are just as enjoyable as expensive ones. I've started putting money I would spend on stupid things into savings and investments. Nothing would be better than buying my freedom to work on whatever problems I want to 100% of the time. I've got mutual funds and growth stocks, but my favorite thing is my dividend stocks. I like watching those returns come in because I'm doing nothing to earn them. It feels magical and has helped curb the desire to buy anything I don't need. If I put it into an investment, the money works for me instead of me working for the system.

sanderjd 6y ago

It's because once I started doing it I found that I didn't actually know what I spent money on, not really. I found that my rough estimates for where my money was going were way off and lagged actual changes in my behavior by a number of months. Just as an example, I still don't feel like my family is spending close to double what we used to on groceries during the pandemic, but I know that we are because I have months of history to compare against. So then you could say, great, so you know that for sure now, so what? Well, this is actionable! Continuing with the example, now we can look at the upward trend in groceries and ask whether we're happy about that. Is it an overall upward trend, or is it coming from something else that we've deprioritized? In this case, yeah, it's pretty directly coming out of eating out and socializing, so not something we need to worry about. But in other cases it has provided data to inform hard decisions about where to cut. And that actionable trade off thing isn't even my favorite part! My favorite part is peace of mind when we buy stuff. I don't have to wonder whether we can afford things, we either have the money for it, or we can move money for it from some other thing we were gonna spend it on, or we just can't afford it. But there's no guesswork, which is so much more relaxing than what I used to do (guess and hope). Your mileage may vary, but for me, it's some of the best invested time I spend.

alexmingoia 6y ago
Do you put savings and necessary expenses aside when paid? To each their own. If it works for you great. I can’t imagine sitting down and tracking whether my grocery expenses fluctuated from one month to the next, since it can’t impact my ability to pay bills and save. If I was worried about not having money for groceries I would set that money aside when I get paid. I also have a family and am the sole income earner. I just set aside everybody's spending money / allowance and they can do with it as they wish.
- sanderjd 6y ago
  Your system sounds simpler but more rigid than mine. In my system, everything is a negotiable trade off. There is not static bills and savings to set aside, there is a trade-off between those things and spending. If I want to spend more on groceries or socializing or vacations in some period of time, that is just a trade-off against all the other things in my budget. Maybe I'd rather find ways to lower my bills than my spending. Maybe I want to save less in some month so that I can spend more on something that will bring us more joy that month. It is easier to make these decisions on trade offs with good visibility into all spending and saving. But I would also suggest that it seems like you're actually doing the thing you said you don't understand why people do. You have a budget, it just has a relatively small number of categories. But the answer to your question is that people do this for the same reason that you do your setting aside of money for bills, savings, and spending.

fluffything 6y ago

> I see so many people categorizing everything with spreadsheets and budget apps and I just ask myself... why? I was saving 30% of my income per month, and wanted to save at least 50%. So I decided to measure my expending, and try to cut it off without actually impacting my quality of life. I discovered that substantial parts of my expending were going to: warm and cold water (2x the national avg per person), electricity bill, take-away food, transportation, health insurance. I changed all the water taps with ones with a lower volume rate "by default" (you have to go out of your way to open them to the max), replaced all bulbs with LEDs, decided to only go for take away once per week but get the nicest and most expensive one instead, bought a bike for commuting, and changed health insurance and electricity providers to similar ones, but much cheaper. Those were minimal changes in lifestyle that bumped my saving ratio from 30% to 60%. Without measuring, I would probably would have taken a bunch of random actions that would have impacted my lifestyle more, and not delivered such a big jump. I don't routinely use these apps, but if you want to continuously optimize your expending, measuring it is step 0.