Sunday, March 4, 2012

You gotta write it all down!

Many of the money books I read when I started to get wise instructed me to write down every purchase that I made. That’s right, everything. Just get a little notebook, and jot down every single purchase. And while I did just about everything those books told me to do, I just could not bring myself to do this essential step.
You can’t tell your money where to go until you know where it went. And a few years ago, I realized that I had gotten lazy and really didn’t know where much of the money was going. 
My darling wife and I had been married for seven years or so. We were DINKS dual income no children – and our careers had matured, so money was flowing. We were saving 15-20% into our 401K’s, we owned our home, we had two new cars and travelled often. We were living pretty well and saving without really trying. So what’s the problem? Life was good, but the lifestyle was creeping.
I forget exactly what the trigger was, but something I read once again mentioned the step of writing it all down, and I finally figured, “What the heck. We’ve tried everything else. Let’s just do it and see what happens. If we hate it, we can stop. Nothing ventured, nothing gained, right?” My wife, bless her ever-supportive heart, agreed to play along. 
I bought two notebooks, one for each of us, and my first entry into my notebook was:
2 Notebooks – $2.24
A pretty exciting start, you’ll agree.
Then for the next 30 days, we each recorded every single purchase we made. At the end of the month, we totaled  up all our purchases, organized loosely by category, to see where it all went. If you do this exercise, you WILL learn something about yourself, I promise. 
What did we learn?  
The first insight was that we each bought something nearly every single day. There was hardly a day that passed when each of us did not whip out the cash or the Visa to buy something. That, I did not expect.
The second surprise was that we has spent just about $300 on wine. Yup, $300 on fermented grapes. Not all at once, but over course of the month we had managed to justify the purchase of about 12 really good bottles of wine. 
This was a “light bulb” moment, folks. Spending $300 on wine might not be a big deal if you are George Clooney, an Un-Real Housewife of Who-Knows-Where or a master sommelier; but we are not those things, so spending $300 was stupid. Preposterous, really. And ultimately not in alignment with our values or life goals. Wine was becoming a bit of a hobby of mine. Time to find a cheaper hobby.
My wife and I decided that $30 a month really ought to be enough money for wine. When we made our budget, that’s what we allocated. Suddenly, the $7 bottle of Shiraz was looking pretty good. And the other $270? Well, it wasn’t too hard to find a better use for that.
I encourage anyone who has never done this to give it a try for at least three months. You will learn a lot about yourself and your spending habits, and like us, you might be able to find some money in your budget that you’d rather send somewhere else. Best of all, after three months of tracking expenses in this way, you should have the information you need to start creating a solid spending plan that reflects the reality of your life, a plan that you can live with.


  1. Mark, how specific do I have to be? Would it be ok to just write "4/7 Walmart $78.65"? Or could I add details like "home goods, food, health & beauty, birthday gift"? Or do I need to be very specific and write every item from that purchase: "toilet paper, 4 boxes cereal, 2 boxes bandaids, spray gel, gift for niece, etc"? And if so, do I need to write the price for each item or just the total purchase? I guess if I write every item I could see when I grab an impulse item like that adorable t-shirt for Gaby, but that could be pretty time consuming. What do you recommend? -Becky

    1. Good question. You need to provide enough detail for the exercise to be useful, but you don't always need to record every single individual item. I group purchases into categories. For example, If I went to the supermarket and spent $100 on food, I would just write: Food - $100. But, if I went to the supermarket and bought food, shampoo, a lawn chair and birthday balloons, then I would break it out by category or item and record what I had spent in each category. In this second case, just writing "Supermarket - $100" would not provide enough useful detail. The occasion when this exercise is most challenging is when you go to a place like Wal*Mart or Target, since you can easily have 10 different categories in the cart.


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