As I’ve been writing The Book Currently Known As Plenty, I’ve read a shelf full of other personal finance literature. One tip which surfaces frequently is to keep a spending log. I understand the appeal — after all, 168 Hours really pushes the idea of keeping a time log — but I have to admit I’m not entirely sold. I suppose it might be interesting, but I also suspect that many of us have a better handle on where our money goes than our time.
For example, few of us know how much time we devote to anything unless we bill (or get paid) by the hour. With money, on the other hand, we have to account for our income with our taxes and our spending when we pay our bills. Indeed, if you pay for many of the smaller expenses of life with a credit card, then you pretty much have an accounting in front of you every month. Now, people may ignore the bills, or ignore that the money coming in is much less than the money going out (as this particularly perilous money makeover from the LA Times shows) but it’s hard not to have some sense of this. At least I think it is (but I’d love to hear if you think I’m wrong!).
I also know that the point of this exercise is often to show how much money we all “waste” on things like lattes or eating out, but I’m not convinced these are necessarily wasteful expenditures when done right. If I’m meeting a friend for coffee or lunch, I’m nurturing social ties, which is one of the best things you can do to boost overall happiness. Small, repeated pleasures contribute more than occasional big ones to overall well-being. If coffee is your favorite small pleasure, then you should definitely try to get into a situation where you’re spending $100 less per month on housing, and enjoying a latte every day.
But I know that spending logs have their devotees (witness the popularity of Mint and Bundle). I’ve also been learning that a surprising number of people are putting cash in envelopes every month to allocate to certain categories. If you’re a fan of these methods of accountability, I’d love to hear why you’ve chosen them, and how they work for you.