A Slow-Tech Approach to Tracking Spending

Ten years ago, I tracked every penny of our family’s spending. That’s good, right? Over time, however, I lost sight of why I was doing it and eventually stopped. Recently, I decided to try it again, and I find myself having the same mental conversation every time I sit down with my receipts.

“I don’t have time for this. Is there any way to make this easier? Can I pay someone to do this for me or use something that does it for me, like Mint?” Then I grab a receipt, and my thought switches to, “I didn’t realize I’d spent so much eating out this month.”

There are plenty of websites, apps and services that have simplified our personal finances. Mint automatically downloads transactions for all our financial accounts. Level Money provides a beautiful snapshot of what it calls “your spendable money at any moment.” There are also scanning apps that make it easy to capture receipts. It’s all so easy, but I can’t escape the sneaking suspicion that relying on automation is costing me something.

By automating the tracking process, I miss the opportunity for reflection and awareness. If someone (or something) else enters all my expenses, I miss the chance to put those purchases in context and assess if my budget is realistic or if I need to make some adjustments. Plus, I’m missing the chance to question my decision to spend the money in the first place.

Then, there’s the whole act of doing it. Last week, Psychological Science published a study about how well students recall a lecture if they type the notes or write them longhand. While the students who typed could take more notes, they didn’t perform as well on conceptual questions. The researchers showed that the typists took notes verbatim, while the writers processed what they heard and then wrote the ideas in their own words. The writers could better remember the message because they’d actually processed what it meant.

I think something similar happens when we try to automate our budgeting process. Pulling in all our purchases automatically sounds an awful lot like typing notes verbatim. The result is a technically correct reflection of how our spending compares with our budget, but we miss the chance to process what the numbers mean. The act of looking at each receipt and adding those numbers ourselves mimics the act of hearing something and then putting it in our own words. We know where the money went, and, hopefully, we know why.

You might be familiar with another service, You Need A Budget (YNAB). While the software will pull in your transactions automatically, the YNAB community appears to feel very strongly about manually entering the purchases. When I asked the question on Twitter a few weeks ago, the responses were overwhelmingly in favor of manual entry.

With all the great tools to track spending, I’ve really struggled with this issue. By concluding that automation may actually cost me more, I feel like a Luddite. But like the process of financial planning, I think the budgeting process is simply more effective when I take the time to manually enter every transaction myself. It’s not really about the numbers, but about the intent behind the numbers.

Keep in mind that with a bit of practice, it will take an hour a week at most to do. (There’s also the side benefit that I find myself making fewer transactions because it means less for me to enter.) What I’ve learned so far is that we’re doing a good job of sticking with our budget, but it has helped me simplify a few things, like using fewer accounts for purchases because it makes reconciling easier.

As I continue with my experiment, I challenge you to start one of your own. I know many of you swear by your favorite app, but for one month, sit down once a week and look at your receipts and enter the numbers in your budget by hand. Then, at the end of the month, see if anything has changed. Do you think about your spending differently? Did you make an adjustment to your budget? Will you go back to automating?

I don’t know what the result will be for you, but as I pick up this habit again, I keep coming to the same conclusion. I’m much more mindful about my money and how I’ve spent it when I look at each purchase. It makes a big difference in my financial life, and I believe it has the power to do the same for you. It’s one hour, once a week. I don’t know anyone who wouldn’t benefit from dedicating an hour a week to their finances. Do you?

This commentary originally appeared May 12 on NYTimes.com

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Carl Richards, CFP®

Carl Richards is the creator of the weekly Sketch Guy column in The New York Times and is a columnist for Morningstar Advisor. Carl has also been featured in The Wall Street Journal, Financial Planning, Marketplace Money, The Leonard Lopate Show, Oprah.com and Forbes.com. His simple but meaningful sketches served as the foundation for his first book, "The Behavior Gap: Simple Ways to Stop Doing Dumb Things with Money."

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