Track Your Transactions, Not Your Money

One of the easiest ways that I have found to fix your spending woes is to track your transactions. People often get fixated on tracking their money, but I have found that the habit of the transaction, itself, is the problem. I would like to take you through my last week's spending.

Last Sunday: Trader Joes (Groceries) $62

Last Monday: CVS (Toilet Paper) $7

Last Thursday: Shell (Gas) $28

Last Friday: Marathon (Gas for wife) $24

That's it. Four transactions. I did this on purpose. I did this to learn a few things about the habit of spending. The average person has around 22 financial transactions per week. The amounts of money spent varies, but the number of transactions is pretty consistent. I used to have a tremendous amount of weekly transactions, but justified it by making the transactions very small. But what I didn't realize was that I was becoming numb to the transaction, itself. Therefore, I rarely hesitated when the costs of the transactions started to creep up.

Two incredible things happened when I started tracking transactions. While I thought I would end up spending the exact same amount of money (or more) by simply reducing transactions, I actually spent considerably less. I figured that I would simply "stock-up" on things, thus increasing the cost of each transaction, but the "stock-up" costs were minimal.

The other thing that happened during my experiment was that the smaller (dollar amount) transactions hurt worse than the bigger transactions. My $62 trip to Trader Joes was acceptable to me, but the fact that I had to go spend $7 on toilet paper put me in a crappy mood. I learned that tracking transactions will reduce the needless transactions.

Try to reduce to your number of transactions this week to below 10. It's more challenging than you think, but it may be the best tool for reducing ridiculous spending.