Why Track?Īs I wrote in Retiring Sooner, “Many spending decisions are emotional – they can reflect our deepest desires and fears. That’s why, though I throw around the common term “budgeting,” what I most often mean, and generally advocate, is simply “tracking expenses.” Yes, in my experience, keeping track of your regular spending and sorting it down into categories on a periodic basis so that you know where your money is going, is vital to financial independence.
These are cheerless documents that prescribe sums of money you are allowed to spend in certain categories before incurring the wrath of your boss, or voters.Īlmost nobody wants to live their private life under those kinds of controls. Let’s start with clarifying some terms: The general loathing of “budgeting” probably stems from the use of “budgets” in business and government. In this post I’ll review budgeting software in general, and discuss my own journey from a dedicated penny-tracker in my early years, to gradually easing up on my financial controls here in later retirement…. Which side are you on? Do you track your spending to the penny, or stuff receipts in a shoebox and sort them out once a year, if then? Or are you something in between? I also noted that “A prominent blogger and author writes that most people won’t even bother to read books that tell them they need to track what they spend, because it makes them feel guilty.” I went on to note that “…a prominent financial advisor and leader in retirement research writes that there isn’t even any point in trying to do retirement planning if somebody can’t figure out his or her basic expenses!”īut the opinion isn’t universal. There is simply too much risk that you’ll run out of money otherwise. In my first book Retiring Sooner, I wrote that “You can’t possibly retire early and safely, without a deep understanding of your expenses. Most of us in the early retirement/financial independence community view budgeting or expense tracking as a fundamental prerequisite for a healthy financial life. My path to financial independence had begun.
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