While earning his master’s degree at the Paris School of Economics, my friend Benjamin Brew was a proponent of the “pay and pray” method, where you spend your money blindly and just hope you have enough. He admits he had no concept of saving or budgeting.
“I was a grad student and I would spend until I ran out of that month’s stipend,” he said. “Then I would borrow.”
All that changed a few years ago, when a friend recommended he listen to a Planet Money podcast about tracking expenses. Newly hired as a data scientist at The Hospital for Sick Children in Toronto, he decided to try it.
Now, he tracks his daily spending in a spreadsheet -- and it’s helped him save about $4,000 in the last 15 months.
At first, he just collected data.
“The great thing about keeping a spreadsheet is you can track every purchase and see how much you’re spending,” he said. “Then, you can figure out what you can cut out, and how much money you can save by doing so.”
When he examined his spending, Brew was surprised by where his money went.
“I used to buy two or three coffees a day and I thought that would be my biggest expense, but coffees are cheap,” he explained.
“What I really noticed was I was spending most of my money on lunches at work. I would spend $12 a day, five days a week. Now multiply that for the whole year and you have a pretty big number.”
Inspired by the numbers staring him in the face, Brew started buying less coffee and packing sandwiches. He stopped buying so much tea and so many snacks, and started questioning his purchases. Did he really need that new shirt? Did he have to go out to dinner so often?
“There’s no need to punish yourself and go without, but you can identify things that are easy to cut out,” he said. “I have a bad habit of spending on things that I don’t need. I didn’t want to look at my spending at first. But once I did, it changed everything.”
After a few months of his new spending pattern, he reviewed his savings, and noticed a big difference from a few months back -- in the hundreds of dollars.
For Brew, it’s all about having money to do the things that are important to him, by cutting out the things that aren’t.
On the sheet, he divides his purchases into “descriptions,” which helps him track his spending on things like “lunch” and “dinner” and “recreation.”
Brew pays for everything with a debit or credit card, and at the end of the day, he opens his banking app and copies all the data into his spreadsheet. This manual entry, he said, is one way he takes ownership of his spending. He has to face each spending decision again, as opposed to letting a tool like Mint handle it automatically.
Brew’s spreadsheet is a simple document, and he shared a copy with me so you can try it for yourself. You can even enter a budget and the spreadsheet will tell you if you’re on track, based on your spending, or if you’re going over.
The spreadsheet template, which you can download here, is a simple and effective way to track what you spend. Each entry should contain four pieces of information:
The spreadsheet also shows you some interesting breakdowns:
Annual spending: To see how much of your take-home annual income you’ve spent so far this year, enter your after-tax annual income in the labeled box.
Daily spending: To examine how much you spent on a particular date, enter the date under "enter any date here." If your spending for that day isn’t sustainable -- if you spent that much every day, you would exceed your annual income -- the cell will turn red.
Spending by category: To see how much you’ve spent on a given category, such as coffee, enter the category name under "enter description here." Based on your spending in that category so far this year, the spreadsheet will also predict your total spending for the year, if you don’t make any changes.
Remember that $4,000 Brew said he’s been able to save in the past 15 months?
Instead of mindlessly spending it on lunch and coffee, he now puts it toward things and experiences that mean a lot to him. In February, we’re going to Vegas for our friend’s bachelor party, and he’s saving up to take his wife on a trip to China, something they’ve always talked about.
“People are always complaining that they don’t have money to do the things they want to do. Thing is, they do have money, they’re just spending it every day, and they don’t realize it,” he said.
“The money’s there, they just need to figure out a way to use it effectively. That’s where the spreadsheet comes in.”
Your Turn: Have you ever tracked your expenses? What did you notice, and did it help you change your spending habits?
Jon Silman has written for Vice, The NY Post, the Miami Herald and the Tampa Bay Times, among others. He spends too much money on books and video games.