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Is tracking every cent a waste of time?

The 80-20 rule tells you to focus on what produces the big wins. Tracking our spending in great detail was no longer telling us much.

By MSN Money Partner Mar 28, 2012 6:03PM

This guest post comes from Lindy at Minting Nickels.


Recently I've been thinking a lot about the 80-20 rule.


If you're unfamiliar, the 80-20 rule, also known as the Pareto principle, states that 80% of your results should come from 20% of your efforts.


There are a lot of uses for this principle, but the way I like to interpret it is: Go for the big wins. Find that key process that produces the most results, focus the bulk of your energy there, and find ways to minimize or automate the rest.


Being a visual person, I found the most relevant example of the 80-20 rule one day while I was watching HGTV.


Have you heard of "Home by Novogratz"?


Robert and Cortney Novogratz are Manhattan home renovators and designers who run the firm, Sixx Design. I first learned of them when Bravo aired a reality show about their family called "9 By Design." On top of managing a successful business, their own television show on HGTV, and being incredibly cute and hip, they also have seven freaking kids.


But after watching one 30-minute episode, it's easy to see how they make it all work. They are experts in practicing the 80-20 rule.


In their designs they go for big and bold and let the rest of the room play a minimalist supporting role. Huge art. Graphic wallpaper. A fabulous mirror. A killer rug.


They don't spend time futzing with tchotchkes -- simply the big wins. (Post continues below.)

Not only do they practice the 80-20 rule in their designs, but also in their family life. On the Bravo show, when asked how she manages to throw birthday parties for her kids on top of her busy career, Cortney said something along the lines of "It's easy. Just make a (expletive deleted ) cake and invite a ton of kids."


My idols, these two are.


Being a working mom, and a mom trying to make money on the side, I'm always looking for ways to incorporate more of the 80/20 rule in my life.


So what does all this have to do with budgeting?

Lately I've been noticing that one activity that has been taking up too much time and producing too little results is tracking our spending.


I've been categorizing our expenses with Mint for about two years now. Though in the early days I was more zealous about it, the process has always been a chore. It tends to be something I put off to the end of the month until those uncategorized transactions pile up so high, I need a good one to two hours to sit down and balance it all.


In the beginning I was motivated to make the extra effort not only to see what we were spending our money on, but also to see if we were spending less than what we earned each month.

But then the months went by, and the amounts seemed to be about the same each time, and the whole process became less intriguing. We consistently spent X amount on groceries, and Y amount on gas, and yadda, yadda, yadda.


Don't get me wrong, tracking our expenses has helped us make some good adjustments. It helped us see that our eating-out habit needed a makeover, for one.


But part of me also feels like it hasn't done much for us lately, which is why I haven't done it for the last three months.


Maybe tracking our spending was a big win in the early days, but now it's more of a mundane nuisance. Maybe now we turn to phase two: check in only once in a while or if we have too many overdrafts.


Do you track your expenses? Have you done it for a long time? Has it become mundane, or is it still of value to you? Do you have another method?


More on Minting Nickels and MSN Money:

Mar 29, 2012 2:06AM

I've stopped having the time to record every dime or nickel.  Truth is, I'd rather be out making money than at home counting it.


...Oh for crying out loud, please stop marking my post as spam!

Mar 29, 2012 9:13AM
Tracking every nickle and dime is a waste of time, I only keep track of the big stuff.
Mar 29, 2012 12:20PM

I'm bad about using coupons for little things but will look for a discount code for large ticket items.  I just don't have the time to clip and track them for what little it saves me is a much bigger effort.

I was monitoring my finances weekly.  I'm trying to pay down debt that I have and it is nice to see it going down.  Although, I realize I get a bigger kick if I check it less often and see a larger change.  I have a cushion in my checking so overdrafts are a thing of the past.  I very seldom had one because I balanced my checkbook.  Now I don't really have to worry and I only do it all on pay days. 

So I somewhat agree with the author.  I think sometimes we spend so much time just staring at the numbers and trying to amalyze them over and over again that we miss out on other things.  It is good to check in periodically.  It is good to have goals, look at your numbers and see how to accomplish those goals (my paying off debt for example).  Still, I don't really gain anything new watching the numbers so frequently.  I can sit there with my info, create a plan and just stick to it and know that everything should fall into place.  I look at them a little less and read a little more or walk a little more or just do something I didn't have time for before.

Mar 29, 2012 11:09AM
I very strongly disagree. It's staying on top of the little things that often make a difference.  For example, I pay by credit card even if I'm just getting a 1% cash back reward on a $10 purchase: it's only 10 cents but it all adds up.  And that's the mantra a thrifty person needs: IT ALL ADDS UP!  As soon as you say to yourself, "the little things are too little to worry about," you've lost the game!  It's about attitude!

I don't mean be a miser: but if I want to spend money on a great birthday party or an overseas vacation, why not let smart shopping pay for part of it?

I'll buy an extra tub of cream cheese on sale for $1.49 rather than pay the regular $1.89 later.  99 cent whole-wheat bread, 49 cent cans of diced tomatoes, 99 cent 1 lb tubs of the "Tastes Like Butter" copycat of the I-Can't-Believe... brand, etc.  I can't say it enough: it ALL adds up!

I once worked where half of the workers made in the vicinity of $60K and half made about $30K. Our $60K group typically brown-bagged lunch and brought in our own coffee and soda while the $30K guys typically made a coffee run in the morning, went/sent out for lunch, and bought $1 sodas from the machines.
One day, one of the $30K guys asked me how I could afford to take vacations in Europe, the Holy Land, Alaska Cruise, etc.  I pointed out to him that if he did his lunch the way I did, it would pay for such a vacation for him and his wife every other year. He was shocked.  Apparently Lindy who wrote this article would be shocked, too!

Mar 29, 2012 12:20AM
Lindy, nice post.  I actually just wrote a response to your article on my blog:  In short, I can meet you half way on this.  Don't track your fixed expenses, but do continue to track your discretionary spending.  I think you'll continue to find opportunities to adjust spending and save money.  I also think you'll be subject to your money managing you vs. the other way around if you step out of the driver's seat.  Best of luck and hope to hear back from you.
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