Start Tracking Spending
You have to start tracking your money. That’s the basic first step. You can’t really plan for your future or retirement until you know your spending.
Here’s how tracking spending helped our family:
- Tracking helped me realize we had a spending problem.
- Tracking let me categorize and analyze our spending.
- It led me to YNAB and the FI community
- Determining your spending is a basic step in retirement planning
- We will retire in two to seven years!
Our summer spending (Two teachers and BIG dreams)
I got serious about tracking in 2019 after we go back from a long, beautiful vacation in Greece. I had budgeted out a rough plan for spending around $10K on the trip, but when we got home I realized we spent over $15k. We had the money and a buffer, but it shocked me. I was already using Mint for tracking, and I noticed a definite downward trajectory when I graphed our spending. The culprit was summer spending.
My wife and I are both on an eleven month paycheck cycle. We had never before budgeted for summer, we just kept a large buffer in our savings. Our past spending was so low that we never really felt pain, but now we had bought a bigger house with a larger mortgage, had kids in preschool, and now the pain was real. I realized that if we didn’t get the spending under control we were heading towards running out of money in a few years.
YNAB (You Need A Budget)
Somehow and luckily I found the book “You Need A Budget!” which led me to the YNAB app. It’s a great book and it actually details how to budget without the app, but I will always use the app.
For five years I have used YNAB. (I first used the now defunct Mint, and I have used Empower as well, but YNAB is the best for me). I link to my bank, credit cards, and investment accounts automatically, and then track a few other accounts You can write it down in a notebook or style it out in a BUJO , but it’s much easier to just do it with an app that auto connects to your accounts.
YNAB has great documentation on how to set it up on their own site and it is also heavily documented on YouTube
Documenting and reporting your spending are one aspect of YNAB. Here are some screenshots of my YNAB spending report from when I just started using the app(the golden days).
Once you get YNAB setup with your categories, it is easy to import and track your spending on a daily basis. The phone app works great, but there are some added reports on the web version, so I would start there. YNAB just raised the price to $109/year, but it’s worth it for even just the tracking aspect.
Tracking the Past: YNAB starts fresh with tracking your future expenses. I have’t really looked into an app that will let you import your past bank statements as it is not important to me as a forward looking type. I have enough data now after five years of YNAB to accurately predict our future spending.
Get started.
Sign on for the free trial at YNAB. Link your accounts and start tracking today. It’s a key step to planning your FI and your financial future.