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Tracking Expenses

Making your money go further
Dod101
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Tracking Expenses

#104342

Postby Dod101 » December 15th, 2017, 12:09 pm

There is quite a lot written on the HYP Board about forecasting dividends for the coming year but I wonder how many of us track our annual expenses. I am coming to the end of my first year of doing so and it is very revealing. I realise now though that I should have entered the data so that it could be interrogated by means of a pivot table although that is a lot of work depending on how much analysis I want.

I have started this very late in life as a result of my change in circumstances when my wife died 18 months ago and I really need to know how much I actually need for my own expenses so that I can give away some surplus to grand children, but I am beginning to think that it is a good idea for anyone and it is not really all that tedious once you get the habit.

Any comments or advice will be gratefully received.

Dod

swill453
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Re: Tracking Expenses

#104355

Postby swill453 » December 15th, 2017, 12:27 pm

I've been doing it with Quicken since 1997. Doing so played a massive part in enabling our (partner and my) decision to stop working 3.5 years ago at the age of 53.

We set a fixed budget then, based on previous expenditure. We've never actually approached spending it, any underspend goes into a "capital spending" pot. We used this to buy a car last year, and have already built it back up to where it was.

Scott.

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Re: Tracking Expenses

#104365

Postby staffordian » December 15th, 2017, 1:22 pm

Same here. I got Quicken in the mid ninties, now use Moneydance, and the insights have enabled us to manage on what was not a particularly good salary and it then enabled me to know with absolute confidence that when I was lucky enough to be offered early retirement, I could well afford it.

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Re: Tracking Expenses

#104368

Postby Itsallaguess » December 15th, 2017, 1:28 pm

Dod101 wrote:
There is quite a lot written on the HYP Board about forecasting dividends for the coming year but I wonder how many of us track our annual expenses. I am coming to the end of my first year of doing so and it is very revealing. I realise now though that I should have entered the data so that it could be interrogated by means of a pivot table although that is a lot of work depending on how much analysis I want.

I have started this very late in life as a result of my change in circumstances when my wife died 18 months ago and I really need to know how much I actually need for my own expenses so that I can give away some surplus to grand children, but I am beginning to think that it is a good idea for anyone and it is not really all that tedious once you get the habit.


I use Microsoft Money to track my outgoings, and although I've used it for many years, I wish I'd discovered it much earlier in life during the time when I used to hand-consolidate my bank-statements with my spending patterns.

Unlike you, I'm still working, and whilst I'm tracking my incoming dividends and the growth in them towards what I hope to be a suitable level where I may begin to think about retirement, that alone only accounts for half of the equation, and if I don't equally track my outgoings then I'm never going to fully understand my real position, or be able to accurately predict any future expenses.

Having many years of outgoings tracked in a package like Microsoft Money means that a much more granular study of such expenditure can be carried out, and as you say, it's very interesting to be able to do this at a good level of inspection.

I think the Sunset version of Microsoft Money is still available for free, if anyone is interested.

Cheers,

Itsallaguess

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Re: Tracking Expenses

#104369

Postby Howard » December 15th, 2017, 1:39 pm

Blimey, Dod! How detailed does your analysis have to be? Would a pivot table analysis change your spending behaviour dramatically?

I have done a back of envelope calculation every year to the nearest few hundred pounds. As you suggest, following the money, gives one a good idea of one's priorities.

For example, I found I spent a lot more on wine than on gas and electricity.

However, if one is that way inclined, as one gets older it's nice to see how much one can give away!

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Re: Tracking Expenses

#104371

Postby vrdiver » December 15th, 2017, 1:43 pm

swill453 wrote:I've been doing it with Quicken since 1997. Doing so played a massive part in enabling our (partner and my) decision to stop working 3.5 years ago at the age of 53.

Scott.

I started tracking outgoings (in Excel) in March 2013, using one worksheet per calendar month. I have a list of "account codes", based on and expanded from the Dealing with Debt SOA, and I ensure that all expenses are entered against a valid account code, which makes summarising by Pivot table trivial each month.

Mrs VRD isn't quite so interested in the detail, so I've negotiated with her to just tell me what she spends, or drop the receipts on my desk. So far it seems to work.

After the first year or so, I started to look at annual spend and allocated money at a monthly level to go into "saving pots" (all in Excel) so that monthly expenditure wasn't skewed by an annual bill or two landing all at once. Things like insurance, holidays, car maintenance, car replacement*, Christmas, gym, computer upgrades, vets bills, gifts, emergency fund etc. all have annual budgets which go into their own pot on a monthly basis, and when actual spend occurs, that is deducted from the pot, not added to the monthly spend. I note that over 50% of our annual spend falls into the "lumpy" category, rather than regular, so having the budget and allocated pots gives me a handle on whether we are cash rich or cash poor, depending on what we are likely to spend vs the cash available to pay for it!

Doing this allowed me to understand our finances were fit for purpose re retirement towards the end of 2014. As we were moving from monthly salary to "random" dividends, I had to have a method that understood annual income, monthly spend, cash flows (in vs out) and required cash reserves to manage lean dividend months.

It also allows me to look at where we are "over budget" and to allocate "pay rises" each year based on where I want to spend more (e.g. holidays and entertainment budgets) if the forecast dividends allow. I have to admit we're neither of us particularly good at spending to budget, but knowing that we are "over budget" does seem to put the breaks on until things have balanced out again. When we've been under budget, there wasn't a desire to "spend spend spend" so the excess at year end becomes a nice problem to have!

At the end of my financial year I review what's in the savings pots and either skim some of it off back to capital (my HYP) or reallocate it as required before tuning the budget for the year ahead, based on the year just gone.

When Mrs VRD says "time for a new kitchen" I just look at the pot called "house" and can suggest a budget, safe in the knowledge that we are not eating into capital or spending cash needed elsewhere.


*Car replacement is funded by having a target mileage / age at which to replace the current car and a planned expenditure on the new car. This then gives me a "pence per mile" or £/month figure, the greater of which is added to the car pot every month.

swill453
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Re: Tracking Expenses

#104372

Postby swill453 » December 15th, 2017, 1:44 pm

Howard wrote:For example, I found I spent a lot more on wine than on gas and electricity.

Ah, I hide the booze under "groceries". That's one bit I don't really want to know in detail :-)

Scott.

Itsallaguess
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Re: Tracking Expenses

#104373

Postby Itsallaguess » December 15th, 2017, 1:45 pm

Itsallaguess wrote:
I think the Sunset version of Microsoft Money is still available for free, if anyone is interested.


Better than that, I've now found that the Money 2005 UK edition can also still be downloaded from the Money MVPS website -

http://moneymvps.org/

http://moneymvps.org/downloads/files/20 ... K-QFE2.exe

Cheers,

Itsallaguess

Dod101
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Re: Tracking Expenses

#104394

Postby Dod101 » December 15th, 2017, 3:05 pm

Howard wrote:Blimey, Dod! How detailed does your analysis have to be? Would a pivot table analysis change your spending behaviour dramatically?

I have done a back of envelope calculation every year to the nearest few hundred pounds. As you suggest, following the money, gives one a good idea of one's priorities.

For example, I found I spent a lot more on wine than on gas and electricity.

However, if one is that way inclined, as one gets older it's nice to see how much one can give away!


Essentially that is what I have been doing as well (back of the envelope stuff) After my wife died I simply had no idea what I was spending money on or how much money I needed and this last year has been very revealing. I may not need as much detail as I currently have but I can easily ignore or discard some if I do not need it but it is difficult/impossible to reconstruct if I feel I need something. A pivot table analysis might not change my spending habits dramatically but it would let me see where my money is disappearing to!

It is though very interesting to see the different ways people keep track. I am all for keeping it simple and after a couple of years might abandon the whole exercise but currently it is proving to be very instructive.

Thanks for all the responses so far.

Dod

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Re: Tracking Expenses

#104420

Postby stevensfo » December 15th, 2017, 5:03 pm

I vaguely remember trying Quicken and MS Money many years ago, but after a while I just did it with a simple Excel spreadsheet. As many columns as I wanted and a nice total figure. It was sooo much faster and easier to use and no problems with updates. Shopping, Diesel, Gas, Elec, Water, Telephone, Insurance.....etc

After the kids left home, I deleted the 'School' column and was amazed at how much their school trips, books, music lessons etc had been costing us.

Anything significant for any reason I just put in 'Bold' and write as many notes as I want.


Steve

johnstevens77
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Re: Tracking Expenses

#104448

Postby johnstevens77 » December 15th, 2017, 9:07 pm

I keep ours on a spreadsheet with 30 different categories. Each category is linked to the income speadsheet so that we know where we stand at any given time. Downside is a bit of head scratching when one of the links goes wrong, but it does the job.

john

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Re: Tracking Expenses

#104454

Postby kempiejon » December 15th, 2017, 10:13 pm

Following a change in job status (my employer released me unexpectedly) I began keeping a detailed analysis in early 2011, I kept it up for a couple of years but became only interested in broad strokes after awhile. Having detailed figures as a starting point I was able to do some forecasting re when my income would be enough and work could become discretionary.

I participated in a software trail called something like Accountz last year, I was able to import my spending from the bank and credit card statements and that over 3 months gave me another detailed view of my spending - not much has changed. I did get some pretty graphs and could do predictions and play with the data. I was not impressed enough with the outcomes to want to buy software to help me track my spend.
Since 2012 I have set an annual and monthly budget, with a knowable income from the day job and a realistic budget I know the surplus amount that I add to my pot invested for income, that helps gives me a target time frame, capital and dividend goal. I think I took my investing much more seriously, rather than just adding spare money, once I knew my expenses. Knowing the numbers allowed me to make some broad assumption about time until Financial Independence.

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Re: Tracking Expenses

#104474

Postby Itsallaguess » December 16th, 2017, 9:20 am

I've just done the main weekly shop, across two supermarkets, and have entered my till receipts into Microsoft Money.

One thing that occurred to me whilst doing so was that if I didn't properly consolidate my spending against my bank balance and incoming wages, I'd not be in a good position to be able to spot anything untowards, or mistaken.

Being able to carry out very quick 'cash-level alignment checks' like this is a handy by-product of tracking spending closely using some sort of software package. If course it can be done by hand, but having done just that for many years before discovering the very useful Microsoft Money, I know it's a laborious task and very time-consuming.

It takes seconds to enter my receipts into Microsoft Money, and it already knows about my regular monthly bills and outgoings, so it tracks those automatically based on the current date.

The 'account-monitoring' aspect hadn't been mentioned yet on this thread, so I just thought I'd bring it up, as I think it is a real benefit to closely tracking spending for purely budgetary reasons.

Cheers,

Itsallaguess

Dod101
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Re: Tracking Expenses

#104479

Postby Dod101 » December 16th, 2017, 9:40 am

Thanks Itsallaguess. You mentioned Money in an earlier post. I use it to track my investments but have not looked at it for budgeting so I must take a look. However I am just off to do some spending (unbudgeted!) so it will be for later.

Dod

Itsallaguess
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Re: Tracking Expenses

#104486

Postby Itsallaguess » December 16th, 2017, 10:28 am

Dod101 wrote:
You mentioned Money in an earlier post. I use it to track my investments but have not looked at it for budgeting so I must take a look. However I am just off to do some spending (unbudgeted!) so it will be for later.


I've got to say that I've never really got on with Microsoft Money for the investment side of things. I gave it a go initially, but just found it cumbersome and unwieldy, compared to the HYPTUSS investment-monitoring I do (with some additional bolt-ons for various income-monitoring and forecasting aspects), and my use of the free Interactive Investor portfolio as a method to monitor things from any web-enabled location.

So I purely use Microsoft Money for my expense-tracking really, but for that it really is a brilliant free tool, and once any automatic monthly incomings and outgoings are set up correctly, the entering of cash or receipt-based outgoings then takes a really trivial amount of time.

Cheers,

Itsallaguess

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Re: Tracking Expenses

#104568

Postby Chrysalis » December 16th, 2017, 4:13 pm

I use You Need a Budget - I think I’m on a legacy version of it. In theory you can import data from your bank statements but I’ve never got that to work. It’s meant to be a budgeting system but I only really use it for tracking and monitoring spending.
I do enjoy (sad) having enough years data to understand how much spending varies (or not) - and it is good to have confidence on what is needed.

swill453
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Re: Tracking Expenses

#104570

Postby swill453 » December 16th, 2017, 4:27 pm

Jabd2001 wrote:I do enjoy (sad) having enough years data to understand how much spending varies (or not) - and it is good to have confidence on what is needed.

Yes, it's very useful.

I just fired up Quicken and in a few clicks got a report of our historical spending on groceries, including:

TOTAL 01/01/13 - 31/12/13 -4428.58
TOTAL 01/01/14 - 31/12/14 -4396.09
TOTAL 01/01/15 - 31/12/15 -4434.45
TOTAL 01/01/16 - 31/12/16 -4402.43
TOTAL 01/01/17 - 16/12/17 -4548.02

So 2013 to 2016 were all in a narrow range of less than £40, but this year is already over £100 more than the previous high. There's nothing out of the ordinary this year, so I guess our personal inflation rate is kicking in.

Scott.

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Re: Tracking Expenses

#104653

Postby JMN2 » December 17th, 2017, 9:05 am

I recently moved house and started a spreadsheet. I am not recording extraordinary, one-off, items but want to see the regular outgoings by month by category, which are

council tax
electricity
gas
water
internet
tv licence
contents insurance
building insurance
boiler service
car insurance
car tax
car MOT and service

so no transport, food, beer, petrol

Itsallaguess
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Re: Tracking Expenses

#104698

Postby Itsallaguess » December 17th, 2017, 12:13 pm

JMN2 wrote:
I am not recording extraordinary, one-off, items but want to see the regular outgoings by month by category, which are

council tax
electricity
gas
water
internet
tv licence
contents insurance
building insurance
boiler service
car insurance
car tax
car MOT and service

so no transport, food, beer, petrol


Is there a reason you choose not to track the cost of these last four categories?

I'd perhaps argue that most of them are more expensive over the course of 12 months, and more important also, than something like a boiler-service, which you do track but which I'd class as much less discretionary than the four you don't track, so I'm interested in why you'd choose not to, given that you then lose visibility of the cost of these important ongoing costs.

For the record, of those four, I regularly record and track food (in the form of the receipts from the big weekly shops) and petrol, but lump 'other transport' (of which there is really very little for me) and 'beer' (which I don't spend too much on anyway, to be honest) into my 'general cash withdrawal' category, but I think keeping track of my food (main shopping) and petrol is an important part of my tracking process.

Not a criticism really, and more a question to understand why you choose to not track these items, that's all.

Cheers,

Itsallaguess

Dod101
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Re: Tracking Expenses

#104700

Postby Dod101 » December 17th, 2017, 12:24 pm

I this year have tracked on an Excel spreadsheet just about every item of expenditure broken down in more detail than I need. I will though use that as a basis for refining the info for next year. Already some interesting stuff coming out and for the first time I know for instance how much I am spending on petrol and food and whisky!

I regard how I finance that as a separate exercise but I use my State pension to finance all travel otherwise I do not touch it although I think it will become the source of cash gifts to grandchildern and other charities.

Dod


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