What’s the most-talked-about financial topic for many Americans today? It’s not the stock market, bonds, gold, crude oil, or even cryptocurrency. Not everyone has invested in those markets. Inflation, on the other hand, affects nearly everyone. And we’re talking not about the PhD-economist version of inflation but rather the version that makes you say: “Whoa, I cannot believe three bags of groceries could cost this much!” Here’s our simple advice: With inflation on everyone’s mind, tracking and reviewing your expenses can be an effective way of relieving some of the pain of higher prices.

Tracking expenses

Where does all of your money go? Food, rent, gas, entertainment, travel, savings? The first step in tracking spending habits is to develop a system for seeing where your money goes. A couple of years ago, in “Why Check Your Spending Habits Now,” I addressed the tracking of expenses and highlighted a few of my favorite financial planning tools:

1. Custom spreadsheets are great for tracking expenses. It can be as simple as making a list of income and spending in a journal or a spreadsheet such as Microsoft Excel. Take 12 months of banking and credit card statements, then create categories such as groceries, mortgage, insurance, entertainment, and gas. Next, compare the expenses with your projected budget and determine whether your spending is moving you toward or away from your financial goals.

2. Mint is a free, web-based tool that allows you to link your accounts to track expenses, and it’s fairly easy to use. Of course, it’s good to keep in mind that, as with many free services, your data is a product and it’s likely being commoditized to allow companies to understand your buying habits.

3. Quicken allows me to see a profit-and-loss statement for our family finances that’s just as professional as any business P&L. I’m a huge fan of this software and have been using it for nearly 15 years. The hardest part is setting up the categories and linking your accounts. After that, the rest is automatic. (Note: Quicken charges a fee every few years for the updated version of the software.) Also, you can drill down on specific expenses and see the details. For example, we noticed that our utilities had increased and become a significant amount of our expenses. We were surprised to find that the water bill was the biggest driver. On further inspection, we found a piping problem and scheduled a plumber to fix it.

4. Mercer Advisors’ Financial Planning Tool is a complimentary tool, powered by eMoney and provided by Mercer Advisors to clients, that can be a valuable part of your financial plan. It’s the easiest to use because you simply link your spending accounts (e.g., checking, credit card, money market) and the software will upload your spending activity, then auto-generate a pie chart and expense detail for reviewing the numbers. In addition, you don’t have to sign up anywhere else or worry about sharing data with yet another vendor. One of the best features: eMoney keeps all financial matters in one secure place for you and your advisor.

Three spending questions that count

I have family members who drive tractor trailers for a living. A few years ago, I spoke with one of them about monthly fuel costs, and I was shocked to hear it cost $4,500 to drive a route. And the price of diesel has almost doubled since then!

High fuel prices matter to all of us, because when truckers deliver goods to warehouses and retail stores, the transportation cost is passed along to consumers. Having investments in individual stocks, equity ETFs, or equity mutual funds has historically helped protect or hedged against this type of inflation, but another way of fighting higher prices is to find where you can save money. So, as you track and review expenses, I suggest asking yourself three questions:

1. Are there any expenses that are not providing value?

My mother, who was a teacher, and my father, who was an avid reader, taught me the value of a great book. As a result, I’ve always been passionate about reading. In addition to heavy academic books, I also like action-thriller paperback novels. My wife suggested that I borrow these books from the library instead of spending money on them, which turned out to be a great idea. While I still buy educational and inspirational books, I no longer spend money on typical grocery-store novels that I’ll read only once.

What about you? Are there any grocery-store novels, trinkets, or gadgets that have no lasting value because you’ll use them only once or twice? Maybe it’s something you bought just for the holidays. Before deciding on your next purchase, ask yourself: Will I still use this three or four years from now? If not, maybe it isn’t worth buying.

2. Do I have to incur this expense in 2022, or can it wait until 2023 or 2024?

Prioritizing spending, especially on big-ticket items, can mean short-term sacrifice for long-term benefit. My wife and I drive 2009 and 2010 cars, each with over 175,000 miles. The cars are well-maintained and reliable, so we aren’t concerned about mechanical problems. Nevertheless, I have a fever to buy something new. Unfortunately, new-car prices are astronomical, thanks to years of low rates, bidding wars, and backlogs due to supply-chain challenges.

We don’t yet have enough money to buy the vehicle we want because we spent some savings on an unplanned home repair, which turned into a renovation project. Improving our home was the better decision, but it also means that we must carefully time our next car purchase.

As I deal with this bout of car fever, I continue to ask myself: Do you have to buy a car today? And the answer continues to be: No. The point is that we all have priorities, and when we consider big-ticket items, it might make sense to delay certain purchases until the timing is right.

3. Am I paying unnecessary expenses such as bank charges, credit card interest, or other fees?

Fees and charges vary by bank, and they add up over time if they’re excessive. It makes sense to shop around for the checking and savings accounts that best suit your needs. Also, some banks allow you to receive an alert when your checking account balance is low, so you can transfer funds from a money market or savings account and avoid overdraft fees.

I was once late with a credit card payment and had to pay a late fee on the balance, throwing away hard-earned money for no good reason. To protect against this, you can set up an alert in your Outlook, Google, or paper calendar to remind you when a credit card payment is due, or you can set up bill pay so your credit card is paid automatically every month. Lastly, with interest rates moving higher, the interest on credit card balances will increase as well. Paying down as much credit card debt as possible can add up to considerable savings over time.

Inflation is on everyone’s mind. We all feel it. Tracking expenses can help ease some of the pain by putting us in control of where our money goes, and periodic reviews of spending habits can be refreshing and enlightening, especially when no one cannot control the economy or financial markets.

Lastly, consider seeking professional help from an advisor. When my wife and I first married, we hired our first financial advisor. Why would someone with my credentials hire a financial advisor? We did it because, while I know that knowledge is important, it’s helpful to have someone other than your spouse hold up a mirror to your life. A comprehensive personal financial plan does just that. We found our advisor’s professional advice—such as purchasing additional life insurance and hiring an estate attorney to draft documents—to be a valuable and worthwhile experience.