Tuesday, 16 August 2016
I keep track of the money I spend, and I have a monthly budget for how I’m planning to spend my money. I’ve done it for years now, so it’s pretty much second nature. When I’m out and about, and I spend some pennies (mostly via a bit of plastic or, more recently, with Apple Pay, because hard cash is just a little bit trickier to keep track of!) I’ll make a note of how much I spent, which card I used, and apply some category to it.
Once in a while — usually every couple of weeks — I’ll go through my online banking, and I’ll reconcile the purchases, adding any transactions that I’ve missed, and maybe recategorising the odd thing I added to “spending money” when I was on the go and couldn’t be bothered figuring out the category for.
From that, I can see how much money I’m spending on each budget category, and how much I’ve still got left to spend. I can do a bit of longer-range planning, figuring out how much money I need to be earning from contract work in order to meet financial goals. I can see what my current burn rate is, or whether things are going “up and to the right” like they probably ought to be.
It’s a relatively straightforward process, and doesn’t take much effort. I always know what state I’m in financially, and I’ve got a fairly rapid feedback loop on the effects of my spending.
Most importantly, for me, it gives me permission to treat myself and spend money. One of my occasional bad habits, for example, is “not getting around to” eating food, especially when I’m out and about. It’s all too easy to skip lunch. I wind up persuading myself that it’s a waste of money to buy a sandwich — I could have made myself a packed lunch for a tenth of the price! — and that I can wait till I get home. (Then, by the time I get home, I’m easily persuaded that it’s hardly worth having lunch, because dinner is just a few hours away!) So in order to mitigate that, I have a category, and a monthly budget, dedicated to “lunches, coffees & snacks”. Knowing that I’ve already budgeted the money gives me permission to make the purchase.
Of course, it gives me permission to make larger purchases, too, once in a while. There are a few categories where I budget money each month, but don’t always spend it. Clothes are a good example, there. I’m not a fashionable person, so clothes are merely a way to keep warm and prevent embarrassment (to others!). So I don’t routinely spend money on clothes, just replace things when they wear out. But I budget for them every month. Right now, I’m putting away £30 each month into that ‘clothing’ budget. I haven’t actually spent any money on clothes all year, so I’ve built up a nice wee pot of cash. I know I’d like to replace my walking boots before winter — they’re no longer as waterproof as I’d like! — so if I happen to spot a bargain next time I’m wandering around town, I know I’ve got the money set aside to just buy them there and then.
(I get the impression people think I’m impulsive in these sorts of situations. I’m not. It’s just that I don’t always make my thinking and planning particularly visible, and I tend not to reveal plans until I’ve come to a decision. I ken that’s suboptimal, since I’m not making use of other people’s input into the decision making process, but that’s a whole other story…)
I was going somewhere with this … ah, yes. For the past few years, I’ve been using an app called You Need a Budget for keeping track of my finances. It’s reasonably well aligned with how I like to track things. It’s got an iOS app I can use when I’m on the go, and a desktop app where I can do the reconciliation. It doesn’t automatically import data from my online banking, but my volume of transactions is low enough that I don’t mind.
Unfortunately, they’ve released a completely new version this year which, instead of being a couple of apps synchronised with Dropbox, is a web app and companion iOS app. That in itself doesn’t bother me — it’s a good architecture, and probably has a number of advantages over the current system — but it means migrating across to their new system. Last time I looked, they’re aiming to sunset the existing app by the end of this year, so I need to make the transition soon.
Since I have to make the transition anyway, I think it’s an opportunity to do a bit of market research, see if there’s anything else out there that’s new and shiny. And that’s where I’m going with this. What do you use to track your spending? Would you recommend it? What apps should I be trying out?
And if there isn’t anything out there that solves the problem for you, what’s your use case? Why don’t you use a dedicated app? You see, I’m suffering from a strong temptation to build something simple that solves the problem exactly how I want it.
(I’ve even got a name — and a domain name! — for it already: Green Tin. I’ll explain that another day, though…)