One habit to rule them all: expense tracking.
And how to build it like a brave little hobbit.
We all know that Sam is the true hero of the LOTR movies. And not the main character, Frodo, who gets a lot of screen time. In the same way, budgeting gets a lot of press, but it’s not the key habit in having your financial shit together.
Making a budget is an exercise in financial integrity: spending your money on what you truly value and love, not just the 1001 distractions that you merely like/spend out of habit or peer pressure. A budget is also the place where you balance keeping both current-you and future-you happy and healthy.
That sounds all nice and dandy, but how do you actually put it into practice? How do you turn your budget into a reality?
If you don’t have a system to track your expenses, your budget is just a theoretical scenario. It’s the equivalent of drawing a map of how (much) you would like to run rather than the map in STRAVA of what you actually ran.
Systems> Self-Discipline
Willpower is a finite resource, so be strategic about it. We’re all just evolved animals with more impulses than money. (Or is it just me?)
Relying on systems 80% of the time so I only have to use 20% of my willpower is what allowed me to work part-time and still have a double-digit savings rate.
Is it possible to learn this power? Yes, but not from an accountant or neurotypical who just uses Excel.
Instead, think about what works best for your unique brain:
If you look at systems that have worked for you in the past (whiteboard calendar at work, Evernote for your school or personal project, etc.), what do these systems have in common?
Think back to when you plan(ned) for exams, organized a birthday party, event, etc.
digital (colorful app)
or physical (sleek notebook)
simple (sleek design/minimalist UX)
or elaborate (lots of details/options)
online (cloud-based, accessible across different devices/exportable data)
or offline (privacy-focused, distraction-free)
For example, if a system is too overwhelming (excel), or too underwhelming (no colors), I lose interest.
Shock or stretch: your choice
Shock your comfortzone or stretch it. Do you go hard, all -in? Or prefer to build it slowly? Both options work.
What you track/scope
Shock: everything. Tracking every single euro is the biggest effort and quickest reward/most insight gained.
Stretch: track key spending categories (temptations, groceries,etc. Maybe add a new budget category to track when you’ve gotten used to tracking a few.) This will already give you plenty of insight, hone your feel for what you really need, and build momentum to be more intentional with your finances.
Not everyone should be tracking everything. Track what will give you the insight you need as long as you have the headspace for it.
When you track
Shock: after every expense. I come home, take off my shoes and coat, put my wallet away and input my expenses. Or sometimes even while I’m in the café, waiting for my latte.
Stretch: Track your expenses once a day, while brushing your teeth/before your gratitude journal/ after doing the dishes/etc.
Or just track them once a week. If you already have a day where you tend to get your post, pay your bills, do your groceries, mealprep, laundry, just being an adult. Why not add it to your adulting-day routine?
Direction of tracking: build bottom-up or correct from the top-down
Build the data or correct the automatically gathered data.
Shock: start with a blank slate and input every expense yourself. You build up the data from scratch. (E.g. Goodbudget app& website)
Stretch: Use an AI-powered app that categorizes the expenses for you and you just have to check and occasionally correct/tag it. (E.g. Bilance app - if you use “S3CSB” you’ll extend your free trial from 1 to 3 months1)
Habit building tips:
Now that you have some idea on what a good expense tracking system might look like for you, here are some final sprinkles to help set you up for success.
While some neurospicies don’t jive with Atomic Habits, here are some of my favorite ways to be as consistent as possible (which is never 100% btw).
Reduce activation energy: put app on the homescreen of your phone
Habit stacking: adulting day is a great example of this
Have a light version prepared: If you don’t feel like doing something, is there a minimum/light version you could do instead? For example, 1 stretch move for 20 seconds is not the same as my usual 10-minute full-body stretch. But 10% of something is better than 100% of nothing when it comes to consistency.
Be honest with yourself: everything new has a learning curve. The goal isn’t to get rid of that, but simply to reduce it by being honest about what you can currently handle. Yes, I would love to have the discipline of Shaolin monk and not need systems, but the reality is that a simple, colorful app works best for me.
Be kind to yourself: when you eventually bump into an issue or lose your streak, you can either get frustrated with yourself and give up, or you can get frustrated and try again the next day.
So what could work for you?
Stretching or shocking? Digital or analogue?
Either way, personal finance is more personal than finance. The challenge lies in finding and building systems that work for your (neurospicy) brain, rather than against it.
In return, if you decide that the €50 yearly fee is worth it, I get a free year of using Bilance. It’s currently the only budget and expense tracking app in Belgium that connects to Belgian banks, and if you need a more flexible and better UX than your own banking app, this could be a great fit.