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Financial literacy · a life skill

Simple Expense Tracking

the purchases you forget are the unusual ones

Ask people what they'll spend in the coming week and they get the routine part about right: the groceries, the bus fares, the bills. What they miss is everything that doesn't happen every week, a present, a repair, a ticket, because each one feels like a one-off. Put together, the one-offs are a regular cost. Simple tracking means writing every purchase down the same day, and starring the unusual ones so you can see how many there really are.

  • Easy
  • Medium impact
  • Learn it: 1 week
  • Star the one-offs
where a week's guess goes wrong
What students guessed they would spend in a week, and what they reported a week later For everyday spending, they guessed 83 dollars on average and reported 81, almost exactly right. For one-off spending, they guessed 39 dollars and reported 70, 31 dollars more than they expected. A WEEK AHEAD, AND A WEEK LATER · MEAN $ guessed reported spending Everyday spending e.g. phone bill, rent, groceries $81 $83 −$2, about right One-off spending e.g. a computer, flights, jewellery $39 $70 +$31 they didn't see coming $0 $25 $50 $75 $100

Means from Study 1 of Sussman & Alter (2012), NYU undergraduates who guessed one week and reported spending the next.

The method

One week, every purchase, one-offs starred.

  1. Guess the week first

    Write down one number: what you think you'll spend in the next seven days, everything included. You'll check it on Sunday.

  2. Write it down the same day

    Each purchase, the day you make it: what it was and what it cost. A note on your phone is enough. That evening is fine; the end of the week is too late.

  3. Star the one-offs

    Anything you don't buy in a usual week gets a star: a present, a repair, a ticket, a fee. These are the purchases memory lets slip and guesses leave out.

  4. Jog your memory on Sunday

    Before you add it up, run down a list: gifts, repairs, travel, tickets, fees, health, the children, clothes for an occasion. Then check your bank app for anything still missing.

  5. Compare, and keep the stars

    Set the total against your guess and look at how much of the gap is starred. Next week, give your guess a line for one-offs you can't name yet.

    Guess, write it down, star, jog, compare.

Example: Jo guesses $250 for the week. By Sunday the everyday lines come to $236, close to the guess. But the starred lines add another $118: a birthday present, a bike repair and two concert tickets, none of which Jo had thought of on Monday. Next week's guess gets a line of its own: “one-offs, about $100”.

The one-week receipt

Write the week down as it happens.

1 · Your guess for the week

2 · Add a purchase

3 · Jog your memory

Pick one to start a starred line, then type what it cost.

4 · The receipt

THIS WEEKevery purchase, the day it happened

    Everyday
    ★ One-offs
    TOTAL

    Solid: everyday · hatched: one-offs · red line: your guess

    The receipt is kept only in this browser, so you can come back to it during the week. Nothing is sent anywhere.

    The research behind it

    Every week has its exceptions.

    Abigail Sussman and Adam Alter asked New York University students to guess what they would spend in the coming week, on two kinds of thing: ordinary purchases, like a phone bill or groceries, and exceptional ones, like a new computer or plane tickets. A week later the students reported what they had actually spent, with a list of examples to jog their memory first.

    The ordinary guesses were close, $83 against $81 on average. The exceptional ones were not: $39 guessed, $70 spent. 54% of the students spent more than they had guessed on exceptional items, against 39% on ordinary ones.

    In a second study, 347 people read about buying a bottle of wine, either from a local shop or while travelling. Fewer said they would make a mental note of the travel bottle. And more of them gave rarity as the reason not to: “I don't make purchases like this often, so there is no need to keep track of it.” The very thing that makes a purchase unusual is what lets it slip out of the books.

    How people said they would keep track of a bottle of wine bought locally or while travelling. Would make a mental note: 87 and 75 per cent. A large purchase, so keep careful track: 45 and 31 per cent. Don't buy this often, so no need to track: 13 and 27 per cent. KEEPING TRACK OF ONE BOTTLE OF WINE · % OF PEOPLE bought locally bought while travelling Would make a mental note of it 87% 75% “A large purchase, so I need to keep careful track” 45% 31% “I don't buy this often, so no need to track it” 13% 27% 0% 50% 100%
    From the wine study in Sussman & Alter (2012), Journal of Consumer Research, 347 people online, each reading one version. All three differences were significant.

    A last study tested a reminder. 242 people chose a watch as a birthday present, from options priced between $15 and $75. Before choosing, one group listed the times they had given presents the year before. Two other groups listed something similar but beside the point: the friends with birthdays in one month, or the travel tickets they had bought.

    The people reminded of last year's presents chose cheaper watches, about $37 against $43 and $44. Seen as one of many presents, the watch was easier to keep in proportion. That is what a starred line does in a week of tracking: it sets this month's one-off next to the last ones.

    These were students and online volunteers, reporting their own spending or making choices with no money at stake. The receipt, the star and the memory list are our own steps, built on what the studies found, not something the researchers tested.

    Average price of the birthday watch people chose: 37.04 dollars after listing last year's presents, 43.30 after listing friends' birthdays, 44.27 after listing last year's travel tickets PRICE OF THE BIRTHDAY WATCH CHOSEN · MEAN $ Listed last year's presents first $37.04 Listed friends' birthdays $43.30 Listed last year's travel tickets $44.27 $0 $20 $40 $60
    Study 5 of Sussman & Alter (2012), 242 online participants. The present reminder group differed from both others; the two control groups did not differ.

    The idea

    Why it works.

    Tracking has two jobs: noticing a purchase and writing it down, then putting it somewhere it adds up with the others. The researchers call these booking and posting, and one-offs fail at both. They are easy not to write down, because they feel like they won't happen again, and they have no obvious line to go on.

    The star solves the second job with one broad category. A present, a puncture and a parking fine have nothing in common except that you didn't plan for them, which is exactly what you need to see. After a few weeks, the starred total stops being a surprise and becomes a number you can plan around.

    When it goes wrong

    Habits that help.

    • Log the same day. A week later you'll remember the rent and forget the birthday card. That's the bias the star is there to catch.
    • Don't sort as you go. Item, amount, star or no star. Categories can come later; a tracker that asks too much gets dropped by Wednesday.
    • Star generously. If you're unsure whether something is usual, star it. Over-counting one-offs costs you nothing.
    • Check the bank app on Sunday. Card payments and direct debits you forgot will be there. Cash won't, so write cash down first.

    Go deeper

    Keep going.

    Resources

    Practise this in HourLife.

    In Finances: Expense log. Log your money once a month, set a monthly budget and track spending by category, and keep every subscription and its charges in one list.

    Download on the App Store Download on the Mac App Store How Finances works in HourLife