In this age of electronic everything and increased compatibility across platforms, it’s easy to become detached from our actual spending patterns and behaviors. We download a credit card statement here, a checking account statement there, and zip zap we’ve made a pretty chart with all of our spending and saving broken into nice pie charts and graphs with sums and totals.
The High Cost of Automation
The more I read about different financial management software packages, the more I hear the same questions. Is this compatible with my banking and credit institutions? Can I automatically download all my transactions? But I submit to you that this automatic importing doesn’t give most people a complete understanding of how their financial behavior lines up with the values they hold.
Getting down and dirty with a spreadsheet and manually entering transactions yourself can do wonders for your financial behavior. Indeed, this forces you to consider each purchase you’ve made a second time, and to think about if the money you spent was really how much you wanted to spend for whatever you did.
Choosing instant convenience over manual entry can cloud the real utility of even the best spending plan in figuring out what we value most, and making sure our financial behavior matches our actual values. Open yourself to the idea that using a spending plan that involves manual entry of data could help you meet your goals and realize your dreams faster than you can without one. Having to reconsider each purchase you make and expense you have keeps you in touch with where your money is really going, not just where you think it is going by looking at the sum of all parts.
The Value of Tedium
The entering of receipts can be rather tedious, and it can be a pain to remember to collect them. But that manual reviewing of what you’ve spent and having to enter it gives you a second reflection on how it aligns with your overall values. Yes, 10% of your overall spending for eating out may be a good number as far as your overall values go. But it makes a difference if that 10% was comprised of two special date nights for you and your spouse vs. 18 runs through the drive through because you didn’t feel like cooking.
It’s easy for us in our busy lives to do something and then push it to the back of our mind and not think about it any further. How many times have you forgotten where you put your keys, your glasses, your socks, or anything else you’ve done absent-mindedly? Spending money can be the same way.
I can run out for diapers and somehow pick up four other things and end up spending twice as much without having thought a whole lot about it until I have to manually classify the receipt and what I spent. Then I start to think about if I really needed to spend my miscellaneous money on random grocery store temptations, and the next time I am shopping, I pick up fewer random items and more what I really need. I’ve personally seen my impulse spending while shopping drop from over 10% of my total grocery bill each week to less than 5%, and often 0%, since I began entering my transactions manually and tracking the impulse portion week to week.
I’m not advocating giving up the pretty tools and the flowcharts and the graphs by reverting back to pencil and paper. Technology definitely has its place, and can be a real asset of analyzing spending trends. What I am advocating is that you let go of automatic downloading of data, and do the work yourself. Even if you can’t want to be bothered to save receipts (though I recommend doing so), you can still do this by using a copy of your bank and credit card statements and entering the data into your preferred method of financial management manually.
Any cash will have to be accounted for, of course, so some receipt-saving is necessary. The important aspect here is reconsidering every dollar you spend, and making sure that it has been spent in a way that is consistent with your overall values and goals as far as your financial health and future. Those small amounts spent here and there, that with automatic downloading of transactions, you might not even notice, can add up to make a big difference if they were put to use thoughtfully and with purpose.
Give your finances a second look, and you’ll be surprised at what you might find. The resulting readjustment of future spending as you start to really consider where your money goes will bring your spending more in line with your actual values, and free up more of your resources for the things that matter most.