With Smartphones like iPhone and Android getting popular, many would say that all they have to keep track is just 1 month spending and do it in their smartphone.
My advice is to use one that you can keep track and review for a long time. Preferably, I hope that GNUCash, which is opensource would be able to do that but sadly its too complex for me to recommend to you guys.
Your Spending Trail is your unconventional diary
If you input every purchases into it, chances are you are able to learn about not just your spending habits but little bits of information that otherwise is hard to remember.
So lets say you want to find out whether the oven you bought for mom has expired. You could try to look for the warranty card, but the easy way is to turn to your Quicken and you will be able to spot that you bought it some where in end july and probably you have another 7 months to go.
Notice that I do have a fair bit of notes and tags in the memo section. These will help you along the way to easily search for these items.
When did I last received payment?
Here is another unique situation. I share my cable tv cost with my brother, but as the subscription is under my account, I paid for it.
Periodically my bro will pay me back but how do I know when was the last time he paid me?
I use the search function to find “cable tv” and appropriately it showed me all the payments under “Cable Tv” category and a gift received tagged with cable tv. Now I know how much I should as him to pay me back!
It gives you a summary of how bad a situation is
Having consolidated near 6 years of data, you can review a particular category of your spending.
Here is a 5 year consolidation of how much I spend on medical. This is from 2005 to 2010.
It is by far an astounding figure. It goes to show that if you keep yourself healthy how much money you can actually save.
I hope I give you some great examples why you should not rely just on your iPhone or Android budget app.
Your spending trail can be very useful to you.
Investment Moats is an investment weblog focusing on dividend investing, growing passive income and personal finance. Learn how to easily budget with my envelope budgeting strategy to save money and not overspend.