Mailbag – do I track cash transations?

“Mailbag” is a new wrinkle to the blog. As our subscriber and reader numbers continue to grow (thank you!), so do our shares and site visitors (click here if you’d like to join the team). With this, I’ve received some questions and comments in response to past articles.

 

If a tweet or quick response isn’t enough for me to sufficiently answer, I’ll write about it on the site. Mailbag’s first installment is below.

 

One last thing. I’d love to hear any questions or comments you have, blog related or – dare I say – otherwise… Let me know. Who knows, you could be referenced in a post!

 


 

Question

 

Ok, so you talked about keeping track of all the money you spend down to the very penny. Using a money app on my phone is how I had done this, manually logging every purchase with a date and not attached. I recently switched to Mint in about October because I like the idea of not having to keep track of credit card transactions because it does it for you. I noticed though there is no real way to log cash transactions. Do you log cash transactions?

 

– Adam P.

 

Answer

 

Yes, I do log cash transactions – with a few caveats and details below.

 

First of all, if you’re going to budget – I mean really budget, not just have an amount set aside for fun money each month – then every cent should be tracked. To not track every cent is not really budgeting. And unless you’re laser focused on your money, it can be both dangerous and pretty easy to lie to yourself.

 

I actually tried this method back in the day – to use cash as ‘fun money’ on whatever thing ‘may come up.’ I’d take $20 out of the ATM and just carry it in my wallet. Inevitably, Friday would come and that cash would be gone. Some weeks I’d try to think back to what I spent the money on and, embarrassingly, I didn’t always know the answer. Ten bucks on a movie, or $5 on a beer at the bar… And the rest??? Eh, it was probably important.

 

I took 2 separate actions to combat this unknowingness.

 

1) I don’t carry cash anymore.

 

“Woah, what do you do, then, if something urgent comes up?” I get creative and either find a free parking spot and walk further, or I figure out a way to pay with a credit card.

 

Another thing: If someone steals my wallet (or I lose it), credit cards can be shut off while cash most likely won’t be refunded.

 

2) We made specific budgets for each category of expenses.

 

This included some money for fast food (Chipotle) and entertainment (renting a movie). When money was most limited in our lives, these budgets were oh so close to $0 for most categories other than the essentials.

 

Paying with a credit card gives me direct and indirect benefits.

 

1) Direct –

 

Using the American Express Blue Cash Preferred card gives us 6% cash back on groceries, 3% on gas, and 1-2% on everything else. See this article for additional information how we earned $750 in 2015 just in cash back rewards (there are some other savings tips in there too).

 

2) Indirect –

 

I am able to look at my online account or credit card statements to see exactly where our money was spent. This allows me to track what we buy and where we can spend less. Less spending = more saving! And you know I’m into that!

 

Adam. You mentioned Mint

 

I too use Mint. I love the app and its ability to set budgets, link all accounts, and track your net worth (negative, or otherwise…). As you said, this app is awesome when it comes to tracking credit card purchases and other digital transactions.

 

Although tracking cash transactions isn’t the most user-friendly thing in the world, it is possible.

 

There are 2 ways (2 is becoming the theme of this Mailbag response).

 

1) You can manually log cash purchases by inputting all of the relevant information into the app (amount, date, category, vendor, etc.)

 

2) You can withdraw cash and classify that amount to be spent on rent, for example. This method works well for those people that use the envelope system. This is where no credit cards are used at all and the monthly budget literally consists of cash in a variety of envelopes.

 

It’s simple and straightforward. Once the money is gone for the month, it’s gone. And until that envelope is refilled on the 1st, it’s time to get creative.

 

This method isn’t for me, but I get the draw.

 


 

Adam – Much thanks for your question and I hope this helps give you some information to consider! Let me know if you have any additional thoughts/questions.

 

Everyone else – I’d love to hear your feedback or questions as well. Questions or comments that spur some thought could be the topic of my next Mailbag post.

 

Thanks for reading!

 

Now that you’ve come this far, here are my humble requests:

 

– Please share this post with a friend.
– If you like what you see, please subscribe to the blog so that our new posts come straight to your inbox.
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I’m glad you’re here. Thanks again and talk soon!

 

– Mike
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2 Comments

  1. Just thought I would add that, while I use mint, I have found it to miss transactions fairly frequently. This app/site is great for getting a general idea for your spending, but when it comes to tracking down every dollar, it needs to be double checked. Example: I spent $~60 at the movies last month in 3 transactions (one for the tickets, one for food, and one for a thank you gift card for someone), mint only ever tracked one of those transactions for $18.

    1. Jon. Thanks for your comment and for reading. I think you make an excellent point noting that Mint does miss some stuff. I’ve seen an increase in minor issues lately, as well, and I’m currently investigating other alternatives… I’d love to hear any opinions you have (or you others out there).

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