How to Stay on Top of Your Finances Without a Budget

detail of a woman writing with a pen in a notebook
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If you grumble at the thought of budgeting, you’re not alone.

The Penny Hoarder recently conducted a financial literacy survey of approximately 1,500 adults and found 40% do not budget their money.

Despite the resistance, creating a budget is what most financial professionals recommend, said Holly Peterson, financial consultant and owner of Elite Retirement Strategies in Pocatello, Idaho. But if you hate limiting your spending with a budget, you might want to take a few months off and focus instead on expense tracking.

“By tracking their spending, people can see where they’re overspending or where certain financial problems are,” Peterson said. “For instance, you might realize that you should probably start packing a lunch from home instead of buying every day. But if you’re not confronted with how much money you’re spending each week or month on takeout, you might never feel the need to change.”

Keep a small notebook with you and jot down whenever you make a purchase throughout the day. The day-to-day record keeping may seem tedious, but try your best to stay consistent.

“Everyone makes mistakes, and there might be days where you forget, but track every purchase, even if it’s an impulse buy, and keep up with your tracking,” Peterson said.

She said you may find yourself being less impulsive with your money now that you have to write everything down and hold yourself accountable for what you buy.

Pro Tip

Peterson recommends taking your tracking one step further and color-coding your purchases by spending category or designating between essentials and nonessentials.

If tracking your expenses manually isn’t your style, download a budgeting app that links to your bank and credit card accounts.

Mint is a great example, because it automatically breaks down your spending into categories, like food and entertainment,” Peterson said.

At the end of the week, total everything up and review how you spent your money.

“Tracking your spending is a great way to make sure that your long-term priorities are matching up with your everyday actions,” Peterson said. “If you want to retire by a certain age, but you’re spending too much to add to your retirement fund, you have an issue.”

While expense tracking is a good first step to managing your money, you shouldn’t stop there. After a few months of recording and reviewing what you buy (and making necessary changes), it’s time to — hold the groans — create a budget. Instead of feeling restrictive, however, your new budget should mirror your actual spending while prioritizing what’s important to you.

Peterson said some people dislike budgeting because they aren’t starting with realistic budgets.

“If you’ve never tracked your expenses, you may have no idea how expensive your lifestyle really is, so suddenly cutting down on everything feels painful — when in reality, you could just take a month or two to track your average daily spending and then figure out where there’s room for improvement,” she said.

Nicole Dow is a senior writer at The Penny Hoarder.