Keep a spending diary

If you feel your money just vanishes or you are worried your budget isn’t realistic, a spending diary will give you the facts you need to take control. Without knowing what you actually spend, all too often plans to cut back are just good intentions that don’t work in practice.


Why you need a spending diary

Many people have little idea about what they spend – it feels as though their income should be enough but most months are a struggle and some are a disaster.  The money just seems to trickle away.

Keeping a spending diary will help:

  • you find where the money leaks are. You may be shocked at how much you actually spend on lunches or snacks or how a few eBay bargains really add up over the month.
  • until you actually keep a record it’s too easy to think you are being frugal because you keep a look out for sales or “meal deal” offers.
  • knowledge is power – when you have the facts, then you can change them.
  • some people find that just having to write down “magazine and chocolate £2.45” means they decide they don’t really want them that much!

 What to record

Handwritten account of what was bought during the day

Note book with spending diaryThat’s how not to do it! It would take forever so you would probably give up, it’s impossible to pull out the information into totals for the month, it misses off the pennies (which can really add up) and the amount sounded like a guess. Fail!

A better set of notes would look like this ========>  This approach is simple, you just need to keep a small notebook and a pen with you at all times.

There are two other options. You can get receipts for everything and scrawl on the back “magazine” if it’s not clear what one is for. This is less work than writing things down BUT it does rely on you not losing any of the receipts and it may mean you miss some small purchases, such as a newspaper from a street seller or dropping a pound in a collection at work.

Screen shop of spending appIf your smart phone is always with you, you will probably find using an app the simplest way. There are a lot out there – friends have recommended Simple Spending Tracker on Android (see screenshot right) and Easy Spending Expense Tracker for iPhones.

Whatever you use, you do need to be a bit fanatical about putting everything in. Leaving off that lottery ticket because you don’t often buy them, honest, or a Friday night takeaway because you were so tired is only cheating yourself!

The longer you can do it for, the better picture you will get of the unusual items. 2 weeks should be a minimum but a month would be much better, or even two.

Adding up the items

If you are using an app, the items will already probably be in categories (“food”, “clothes”, “entertainment” etc) and be added up for you. Otherwise the easiest way is to enter them all into a spreadsheet at the end of each week – or each day if you feel very keen or have a tidy nature.

You should use categories that are most useful to you, for example using different columns for adult’s and children’s clothes. Keeping lunches at work and snacks separate from eating out with friends and family is often sensible.  A Sundries bucket is good for rare stuff – perhaps you only get stuff dry-cleaned once a month – but don’t over-use it.

Don’t have “cash spending” as a category!  The whole aim of this process is to find where the money is going not whether you used a cash or plastic.

Is anything jumping out at you?

Next month’s resolution is to get a well worked out budget. But already somethings may be becoming obvious. Do you over-indulge in treats, having them not as a rare indulgence but as a routine part of your life? Keeping a spending diary may make you realise that you tend to have a takeaway or buy some clothes if you have had a bad day at work.  Keep a note of any patterns like this, because this will make it easier to break bad habits and establish better ones.

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