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Financial literacy · a life skill

Deliberate Expense Tracking

next week is never a usual week

Once you've tracked a few weeks, the next step is to look ahead: on Sunday, say what the coming week will cost. Most people build that number from a usual week, the groceries, the fares, the bills, and most people come in short, because next week has something in it that a usual week doesn't. Deliberate tracking means forecasting each week from your usual list plus three reasons this one will be different, then checking the forecast against the bank a week later.

  • Moderate
  • High impact
  • Learn it: 2-4 weeks
  • Three reasons, every Sunday
five weeks of forecasts
How far credit union members' weekly spending forecasts fell short, week by week Forecasts fell short of what people then spent by 105 dollars in week 1, 106 in week 2, 62 in week 3 and 55 in week 4. In week 5, people who forecast as usual fell 80 dollars short. People who first listed three reasons the week would be different came in 7 dollars over: no real shortfall. FORECAST MINUS WHAT WAS SPENT · MEAN $ ← fell short Week 1 −$105 Week 2 −$106 Week 3 −$62 Week 4 −$55 Week 5, as usual −$80 Week 5, three reasons first +$7 $0 −$50 −$100 Week 5 split people at random into two groups.

Study 1 of Howard, Hardisty, Sussman & Lukas (2022): 187 members of a Canadian credit union, each checking last week's spending in their online bank before forecasting the next.

The method

A forecast every Sunday, checked the next.

  1. Check last week against the bank

    Open your bank app and add up what actually went out in the last seven days, cash included. Set it next to last Sunday's forecast and note how far off you were.

  2. Write your usual week, item by item

    Groceries, travel, lunches, the bills that land weekly. This is how most people forecast anyway; writing it down makes the list something you can check and correct.

  3. List three reasons next week will be different

    A birthday, a trip, a repair that's due, a night out, a day working from home. Put a price on each, more or less than usual. Three is enough; you don't need ten.

  4. Add them up and write the forecast down

    The usual week plus the three reasons is the forecast. Write it where you'll see it on Wednesday, so a surprise has a number to be measured against.

  5. Next Sunday, check it and go again

    If you came in short again, look at what was missing. The gap is nearly always something that wasn't on either list, and it's next week's first reason.

    Check, list the usual, three reasons, add, repeat.

Example: Ade's usual week comes to $240: groceries, travel, lunches, the phone and a couple of coffees. Last Sunday that was the whole forecast, and the bank says they spent $318. This Sunday they add three reasons: a friend's leaving drinks (+$35), the car's annual service (+$120), and working from home on Friday (−$10 of lunch). The forecast is $385, and on Thursday the service bill isn't a shock.

The Sunday forecast

Your usual week, plus three reasons.

1 · Your usual week

What a week costs when nothing unusual happens. One line each.

    2 · Three reasons next week is different

    Anything coming up that a usual week doesn't have, or that it does and next week won't.

      3 · Last week's check

      4 · The forecast

      Next weekSunday forecast

      Solid: the usual week · hatched: what the reasons add

      Your lists are kept only in this browser, so next Sunday's forecast can start from this one. Nothing is sent anywhere.

      The research behind it

      The usual week is the wrong guess.

      Ray Howard, David Hardisty, Abigail Sussman and Marcel Lukas followed 187 members of Vancity, a Canadian credit union, for five weeks. Every Sunday they logged into their bank, reported what they had spent in the past week and forecast the next. Their forecasts fell short every single week, by $55 to $106 on average, and in each of the first four weeks between 60% and 69% of them came in under. Checking the bank weekly didn't fix it.

      In week 5, half of them were first asked to type three reasons why next week might be different from a typical week. Their forecasts were 36.7% higher than the other group's, while what they went on to spend was no different, and the average shortfall disappeared. The share who came in under fell from 66.2% to 47.6%.

      Why does the usual week fall short? In a think-aloud pilot, 84% of people forecasting their week talked about typical spending, and for two thirds it was the first thing they thought of. A usual week is easy to remember. The things that make a real week cost more are, by definition, not in it.

      Forecast against recalled spending in three groups. No reasons: 215 forecast, 237 spent. Three reasons the week would be the same: 200 forecast, 213 spent. Three reasons it would be different: 271 forecast, 252 spent. NEXT WEEK'S FORECAST AND LAST WEEK · MEAN $ next week's forecast what they spent last week No reasons $215 $237 Three reasons it'll be the same $200 $213 Three reasons it'll be different $271 $252 $180 $200 $220 $240 $260 $280
      Study 2 of Howard et al. (2022), 1,048 adults in a nationally representative US sample. Thinking of reasons the week would be the same changed nothing; reasons it would be different lifted the forecast above last week.

      The second study, with over a thousand American adults, separated the two halves of the trick. People asked for three reasons next week would be the same as usual forecast no differently from people asked nothing. Only reasons it would be different moved the number, by bringing to mind specific things that were coming up.

      A third study asked for zero, three or ten reasons. Three raised forecasts by 46.9%. Ten felt harder and added less than the first three did, a difference small enough that it could have been chance. Three reasons is the useful part.

      These studies measured forecasts, not savings: people who listed reasons did not spend less, they just saw it coming. The usual-week list, the forecast card and the weekly check are our own steps built on these findings, not something the researchers tested in this form.

      Average forecast for next week after listing no reasons, three or ten reasons it might be different: 162, 238 and 277 dollars NEXT WEEK'S FORECAST · MEAN $ Listed no reasons first $161.87 Listed three reasons first $237.84 Listed ten reasons first $276.50 $0 $100 $200 $300
      Study 3 of Howard et al. (2022), 749 online participants. Three reasons against none was a clear difference; ten against three was not.

      The idea

      Why it works.

      A week of spending isn't spread evenly around an average. Most weeks cluster near the usual amount, and a few run far above it: the week of the birthday, the boiler, the wedding. The usual week sits at that cluster, below the true average, so a forecast built from it comes in short more often than not.

      Asking what will be different pulls the specific exceptions into view before they happen. It doesn't need to catch everything. In the studies, three reasons was enough to bring forecasts level with what people went on to spend.

      When it goes wrong

      Habits that help.

      • Price every reason. “Busy week” isn't a reason until it has a number on it, even a rough one.
      • Let reasons go both ways. A week away from the office can cost less. Writing that down keeps the forecast honest rather than just padded.
      • Don't stop at the shortfall. When last week came in over, find the line that caused it. If it'll happen again, it belongs on the usual list.
      • Keep it to Sunday. Ten minutes, same time each week. A forecast you only make when you're worried about money isn't measuring anything.

      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