Personal Finance Tips - Are you Spending Money Where it Matters to You?

To track spending, or not to track spending... [via Wise Bread]

Philip Brewer at Wise Bread writes about why tracking your spending habits is important. To Brewer, the purpose of expense tracking is meant not to keep track of every penny spent, but to see whether or not your money is being spent on the things that matter to you. Brewer points out that, sometimes, we're unaware that we are spending money on things that aren't as important to us (like Jim and his utilities), and it's those insights where expense tracking can be handy.

When you look at your expenses over time, it's good to do a gut check to see if you're satisfied with where your money is going. Spending a couple of bucks on a latte isn't necessarily bad, but only if that drink is important to you. I have members of my family who find a good cup of coffee as a prerequisite for starting their day; they've made a conscious decision that the cup of coffee is important to them, and they are willing to spend some of their income satisfying their need. While coffee isn't my thing (too bitter,) I enjoy playing computer games (which, sadly, cost about 25 times more than a cup of coffee.) I don't mind spending my money on that expense, but I've made a conscious decision to spend money on items and activities that are important to me (computer games) and not on items that are unimportant (coffee). There's another good article over at I Will Teach You To Be Rich that talks about "Conscious spending" and how it fits in with your personal finance plan.

With Quicken Online, expense tracking is simple with the "Track Spending" feature. With one click, you can visualize where your money is going on a monthly basis. Looking at my own expense history, I'm seeing that I'm spending a bit above $200 per month in groceries (and that's just for myself.) The question I ask myself is whether or not that spending $200 per month on food is worth it. For me, I do enjoy cooking for myself and for others, so I do derive some benefit from having that food. At the same time, though, I'd love to have another $50 per month to spend on entertainment (go to a SF Giants game, grab another DVD or computer game, etc.,) and I could find ways to divert some of this grocery money to spend on other things (or save it for something bigger in the future.) By tracking spending, I'm able to use more of my money on the things that matter to me and less of it on stuff that I'm not too excited about.