Author Topic: Which are the best tool to find ways to reduce expenses?  (Read 826 times)

embwbam

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Which are the best tool to find ways to reduce expenses?
« on: September 08, 2020, 03:07:10 PM »
So, I'm helping my GF with her finances, and she asks me "What am I spending all my money on?". She's using a spreadsheet right now, and categorizing her expenses by month. I do something similar for myself. It's not an easy question to answer.

I'm imagining a tool that takes your transactions (either sync or uploading a csv), then lets you explore what you spent it on in various ways. You can categorize them and it starts using your terminology, removes edge cases, etc. I went to look for such a thing. I've looked at mint.com and ynab, among others. Are these really the best tools that exist? I see the following problems:

1. They use monthly budgets: when I needed an MRI in march, it's not part of a monthly health budget. Annual expenses make much more sense.

2. Analysis is super primitive. One pie chart that lets me drill down and see expenses in that category? Are there no other ways to view this? 

3. They don't help you spend less. Mint's feature just sells you credit cards. It doesn't show you how many years you could retire early if you stopped going to starbucks or cancelled your cable bill.

Is there something awesome out there that I'm missing?

Would you use a tool that helped you understand and reduce your expenses? What would you expect it to do?

MDM

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Re: Which are the best tool to find ways to reduce expenses?
« Reply #1 on: September 08, 2020, 03:12:57 PM »
Is there something awesome out there that I'm missing?

Would you use a tool that helped you understand and reduce your expenses? What would you expect it to do?
Depends on your definition of "awesome" but I'll guess "probably not."

Quicken is another product worth considering.

Any of these, used conscientiously, can help one "understand" expenses.

Reducing those expenses is a matter of choice, not software. ;)

APowers

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Re: Which are the best tool to find ways to reduce expenses?
« Reply #2 on: September 08, 2020, 05:24:36 PM »
IIRC, the supreme of the supreme method is recommended in Your Money or Your Life and it is........writing it down by hand. On paper. Every time you buy something.   Super annoying, yes, but part of it is that the physical act of jotting a note ("coffee: $4.78") triggers your brain to think about it differently.

I generally expect that it's not the $3k MRI that's "where is all my money going?" More likely, it's the impulse buys at the grocery/department/clothing/amazon store...

middo

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Re: Which are the best tool to find ways to reduce expenses?
« Reply #3 on: September 08, 2020, 06:25:31 PM »
I use an app called "money manager" to track my expenses.  It only takes a few seconds for each expense to be logged, but I do have to remember to log each expense.  There are others (for free) that are available.  I can download a csv file at the end of each month and do my own analysis in Excel.  I have been tracking expenses this way for the last 3 years.

Tigerpine

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Re: Which are the best tool to find ways to reduce expenses?
« Reply #4 on: September 08, 2020, 06:34:35 PM »
I use an Open Office spreadsheet for tracking expenses.  Each month has its own tab, and there is a separate tab which compiles the monthly data into one place and calculates the average, median, and total spend for each category.  I also have the month budget listed on this tab so I can easily compare. There are other tabs as well, which I modify a little from year to year to suit changing needs/knowledge/circumstances.

I think that if you want a custom tool, you need to develop it yourself.

TheDuder

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Re: Which are the best tool to find ways to reduce expenses?
« Reply #5 on: September 08, 2020, 10:48:35 PM »
Excel spreadsheet and if I'm not around my computer to enter it, I keep a running note pad list going with the info until I can log it into the spreadsheet.  Easiest way I have found.

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Playing with Fire UK

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Re: Which are the best tool to find ways to reduce expenses?
« Reply #6 on: September 09, 2020, 12:03:05 AM »
Demotivator tool is a super quick way of showing how little daily or weekly expenses add up. This budgeting spreadsheet works well for weekly, monthly or annual expenses. They're UK focused so will need a little adjustment for your expenses. The spreadsheet is good when you only have a couple of months' expenses and are looking for an annual estimate, or when your budget balances until Christmas and then breaks in three places.

The most useful thing for me (when I was getting my shit together) was turning everything into an annual number (and into a percentage of my take home pay). Do I really want to spend 5% of my budget on coffee? Do I want to continue to spend 15% of my pay on impulse shopping online. There is something informative and terrifying about seeing all of those "one off" purchased rolled up into an annual number.

I wouldn't want a third party tool to do these things, because I there was so much value in building my spreadsheet and doing the analysis for myself. The things that I find useful won't be the same as someone else. And the motivation when you are certain that there must be an error in the spreadsheet but it turns out the numbers are right... priceless! The frustration when the tracking website categorises a £4000 payment for a kitchen renovation as "Dining Out", deal-breaker.

MusicLover

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Re: Which are the best tool to find ways to reduce expenses?
« Reply #7 on: September 15, 2020, 04:58:04 PM »
Theres always the old Microsoft Money, now available for free.  I've kept mine going for 20 years now and use an excel add-in to extract all the transactions and then show me my yearly spending by category for the past 20 years.  Like others have said, the simple discipline of having to enter the transactions makes me a little more mindful of how I am spending.  Also, seeing the yearly surplus that ends up being invested, has been a great motivator for me to make better choices over time.

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MadBikePoet

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Re: Which are the best tool to find ways to reduce expenses?
« Reply #8 on: September 16, 2020, 10:10:03 AM »
@embwbam
First off, awareness is key! You are getting that by doing any sort of tracking as long as it is complete and accurate. I followed the ďYour Money or Your LifeĒ plan and made my own google spreadsheet. It included a column that forced me to consider how fulfilling each expenditure was every single time.

And this is the next key. Do not get mired in tools and spreadsheets. When it comes to the hard work of actually reducing expenses (which is your goal, although probably a means to another end), you need to have a handle on your personal values. Itís the only way to frame those lifestyle changes as being necessary to align your spending with your values instead of just being sacrifices.

Most people underestimate the importance of money mindset and getting at their core values. Itís everything. If your goal is FI, then you need to understand why that goal more aligns to your values than all these other things that can be bought with money.

I reached FI 3 years ago, and now I am a financial coach. If you PM me your email address, I would be happy to share the spending spreadsheet I created that got me to FI. Itís not fancy, just effective. It jazzes me up to see people taking control of their financial situations, and I love offering whatever I can to help.

diapasoun

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Re: Which are the best tool to find ways to reduce expenses?
« Reply #9 on: September 16, 2020, 12:14:11 PM »
I also just use a spreadsheet. Mint is handy for checking accounts on the fly, but eh.

Things that help me in my spreadsheet:

--calculating each category as a percentage of monthly and yearly spending (very much helps you see "what am I spending all my money on?")
--calculating my Freedom Days, which requires me to track over time how much a day of living my lifestyle costs (also helpful for seeing where the money goes)
--the first tab in the sheet is just a chart that shows me how much of my restaurant, charity, and grocery budgets I've spent so far that month (this gives me quick access to see whether or not it's a good idea to buy that burrito/donate to that fundraiser/etc).

Agreed that there's a lot of psychological work that goes towards having a healthy relationship with your money, too.

Sandi_k

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Re: Which are the best tool to find ways to reduce expenses?
« Reply #10 on: September 18, 2020, 12:29:25 AM »
I too use a spreadsheet that I've created and honed over the years. I tried YNAB, and just don't find the value, as I am already savings in excess of my goals.

But the book that flipped a switch for me in terms of HOW to think about expenses was the Warrent & Tiyagi book All Your Worth.

The basic premise is that your fixed, needed spend should be no more than 50% of your income. They then recommend 20% for savings, and 30% for wants - but I reverse that. So 30% for savings, and 20% for wants.

If you can manage to align your spending with those percentages, you will succeed with money - because it teaches you that each monthly commitment MATTERS as it further shrinks your financial options. Monthly commitments and obligated payments are a sure way towards being captive to your spending.

Great book, with worksheets.

https://www.getrichslowly.org/images/GRS/BMF-handout.pdf

BikeFanatic

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Re: Which are the best tool to find ways to reduce expenses?
« Reply #11 on: September 18, 2020, 03:52:35 AM »
I would second quicken Mint, it is free, and helps you see and track everything, every transaction and you can set a budget for categories. I especially like it to track what my spouse and I spend on credit cards, and keeps us committed to saving.