Not All Details Matter: Spending

I still track my spending down to the penny. I’ve been doing this for over eight years now. But after verifying that my transactions posted correctly in online banking, I don’t care about the details in each category.

Creating a spending plan was really, really hard for me since I care way too much about the details. I’m doing pretty well with my spending plan now, but the first year that I was using one was hard. I didn’t use one through most of college, though I did in my last academic term and I did after I moved to start my full-time job.

I started out breaking down food down into different line items so that it was easier to budget for: alcohol, dinners out, on-campus food, groceries, and junk food (aka chocolate bars). I broke clothing down only for bras – everything else was grouped into the general category.

My post-college spending plan first started out with so many details. I can’t believe I was trying to track everything that I did. I learned that I simply can’t budget for some things.

I can’t budget for how many books I’m going to buy in a month or how many times I will eat out with friends. All of that just gets looped into “Entertainment”.

Also, having a separate category for chocolate bars was too detailed for me, so I just count those bought from the vending machine in “lunches out” and those bought in bulk under “groceries”.

I learned that grouping everything into “Clothing” just didn’t work because I really couldn’t tell what the number meant, so I split it out into the subcategories that I have today: bras, bottoms, athletic wear, dresses, coats, shoes, socks, underwear, tops, and swimwear.

Instead of getting mad at myself for roaming fees on my cell phone, I round the bill up to the nearest $5 and then I’m happy when I’m under “budget” every month.

I set budgets for travel to figure out how much I spent, but while I’m on vacation, I don’t think about the budget and just spend money. That seems to work okay since I have a natural aversion to spending too much money.

I’ve stopped trying to budget for “household cleaning supplies” and just leave that under groceries. It’s not very much anyway and I’m always under budget on groceries.

You might think that my spending plan has too much detail, but I think I’ve finally found the right balance in detail for me.

Readers, how do you determine which details matter to you when creating your spending plan?

15 thoughts on “Not All Details Matter: Spending

    • It totally would if I had a necessities category! Chocolate is oh so very important to life functioning well. I think that’s why it tends to go in groceries over any other category since I won’t argue with myself if I go over budget on groceries!

  1. I’m not very detailed.. because I don’t plan at all =\ I just pay my bills & my debt and spend whatever is left. It’s not great because I end up going broke way before payday. It’s definitely a habit I have to fix.

    • My budget is 90% based on past data for the variable categories. Just try tracking your spending for a few months and I’m sure you’ll find a pattern.

  2. I have a few broad catagories and then break it down from there if a particular expense will be reoccuring. If I have a large non-reoccuring expense (dental check-up, theater tickets, etc) coming up, I’ll add it into the budget so I would know why a particular catagory’s expenses skyrocketed for that month.

    • That’s why I separated out things like my Pandora subscription – they’re small, but they’re recurring and I want to remember that they’ll happen.

      Sounds like you have a similar overall system to me :)

  3. I am not very detailed. Big picture I know that we spend way less than we earn. After that I figure out how much we want to save each much, set that aside, and then know we have the rest to spend. If I ever feel like we’re spending too much I’ll track everything for a few months. By keeping our fixed expenses as low as possible- we don’t have to stress too much about the details.

    • Ps- when money was tighter and I was laying the groundwork for good saving, I used the balanced money formula: 50% needs, 30% wants, 20% savings. Now we’re trying to sve more than 20% but that’s because salaries have increased and we’ve tried to not increase expenses too much.

      • I actually have a post scheduled on how the balanced money formula is way off for me in that a more appropriate formula would be 50% savings, 30% needs, 20% wants. My salary is high enough that I could not possibly imagine spending 50% on needs.

  4. I think that if I could give you one piece of financial advice (clearly you don’t really need any from me though), it’d be to stop sweating the small stuff. I used to budget with great detail (though nowhere near your degree of detail). After university I continued this practice as I adjusted to the real world. The average person should keep a budget, because the average person doesn’t save enough money and the devil is in the details.

    Now – and this will sound terrible – I don’t keep a budget. It’s in my head. I’ve got a great deal of financial discipline. As for collecting “actuals” to compare against the budget: my marginal utility declines massively when I do anything more than putting receipts in a receipt holder to keep it for 6 months (in case I need to return the item). Tracking expenditures and then comparing them to my forecast just isn’t justified by marginal utility (in my situation) – if I use that time to relax and watch an extra episode of Sons of Anarchy each week, I’ll probably end up saving more money.

    But, of course, this is most definitely a matter of personal preference/style and I have ZERO right to call anybody else out on financial OCD (PS I’m going to change my US$ savings account for another 0.1% bump in the interest rate lol)

    • I have definitely gotten a LOT better about this. I like to have a list of everything that is reoccurring, but for the variable stuff, a lot of it is honestly just looped into Entertainment at this point. And once I’m on vacation, I really don’t watch what I spend at at all. I’m definitely working on caring about the details. One of my coworkers would tell me that eventually, I shouldn’t notice $7 and honestly, I don’t that much anymore, so long as I *want* the thing. If I don’t want the thing, I’ll still notice it.

      Keeping a budget doesn’t help me save money – it actually makes me spend more money because it makes me feel less guilty about spending money since it’s allocated. There’s enough of a float in my checking account ($10k) that if I go over budget on something, it really doesn’t matter. So I really don’t care that much – they’re all estimations anyway.

      I usually only collect actuals once around the 10th or so of the month when the big bills have all been paid, then around the last weekend prior to the end of the month, and lastly, just after pay day to do a final reconciliation for the month.

      It’s actually relaxing to me to collect the actuals and compare them to my forecast :) It’s something that I look forward to!

      • As bizarre as it sounds that reconciliations could be relaxing and enjoyable, perhaps it makes just as much sense as doing Sudoku or the like.

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