Why you should write down every expense

If you have issues with overspending, writing down every transaction can make you more mindful – and more critical – of your habits.

Romeo Ranoco/Reuters/File
A worker counts US dollar bills inside a money changer in Manila in April. Hamm argues that the act of writing down what you spend can make you more mindful, and critical, of your finances.

Megan wrote in recently with a long story that I’ll use in a future Reader Mailbag, but in a paragraph that didn’t have to do with her story, she asked a seemingly simple question.

What made you shift from not paying attention to what you spent to worrying about spending a nickel extra on toilet paper?

It would be easy to answer this with a broad answer of saying that it had to do with the realization of my responsibilities as a parent and with changes in my personal values and beliefs.

Looking back, though, I think it had to do with something much more “real” and practical than that.

For several months – just shy of a year, actually – I made a habit of writing down every penny that I spent. If I spent a quarter on a piece of gum, I wrote it down.

I kept track of this in my pocket notebook. It wasn’t really hard. I just had to make a routine of jotting down every single expenditure in that notebook. If I didn’t have time immediately, I jammed a receipt in there and wrote it down.

What I found is that as I was writing down each expense in that notebook, I became really critical of that expense.

I’d write down $100 spent at the grocery store and I’d think to myself, “Really? I blew $100 at the store. Why?” Then I’d find myself studying the receipt and questioning a lot of the items on there. “Did I really need that item?” “Couldn’t I have just bought the generic?”

Over a period of time, I began to really question everything I spent money on. It became a very natural thing to look for a lower-cost alternative.

I wanted badly to reach a point where I wasn’t shaking my head at myself whenever I wrote down an entry in that notebook.

Eventually, I reached that point, more or less. I went weeks without writing down anything that made me uncomfortable or made me want to seek out a lower-cost alternative. It was at that point that I put the habit aside.

That period of time reshaped the way I think about spending. Every little dime matters and, as you’re spending money or considering it, it’s worth thinking about whether or not there’s a better way to go about this purchase. Do I really need to buy this item? Is there a cheaper alternative that’s just as good?

Forcing yourself to go through every single expense is a real eye-opener. It’s not just a matter of buying the slightly more expensive toilet paper. It’s about dozens – even hundreds – of those types of decisions we make each week, and they really add up, on the order of hundreds of dollars per month.

Try it. Get yourself a little pocket notebook and a pen and take it with you everywhere. Write down every single little thing you spend money on. As you’re actually writing it down, think about whether that was a good use of your money. Was there a better way to do it that achieves the same or similar results with less expense? Did I really need to buy that item or service?

The amount of waste will probably shock you.

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