Do you often get to the end of the week and find that there is not enough money for the necessities of life such as food? Your money seems to have disappeared and you can’t seem to work out exactly what you spent it on? I used to be like that and I find the best way to track expenses for me was a simple spending diary.
I took my spending diary (also known as a notebook) everywhere with me and every penny spent was accounted for. At first I felt a bit silly, but when I realised how much I was spending on little items such as coffees and magazines I realised there could be easy ways to rescue my budget.
Now I know it is not some great discovery and people have been doing this for a long time but it was new to me. It allows you to keep track of all your expenditure and for best results I suggest you put the totals onto a spreadsheet.
It is important that you take it everywhere with you, are you going to really going to remember to write down that beer you had at the local pub? If you get a little friendly ribbing from your friends, maybe you should encourage them to have their own spending diary and have a bit of a competition to see who can improve their budget the most!
My friend from Brisbane recently tried this method and was amazed (dismayed) at how much she spent on lunches per week. She has now committed to taking her lunch at twice a week (at $10 per lunch) that is a saving of $20 per week ($80 per month, $960 per year based on 48 weeks worked). The next task on her list is to reduce coffee expenditure and she thanks her lucky stars that she doesn’t smoke! (big expenditure outflow).
I even took my spending diary on holidays to Melbourne. I relaxed my spending a little bit as after all I was on holidays and Melbourne is a great city to buy great clothes at a great price. For me it is all about balance, if I reduce my spending on a regular basis then a controlled splurge now and then is ok.
The daily totals should be put onto a spreadsheet and broken up into categories, for example food, takeaway, magazines. It is up to you how specific you get on your spreadsheet, but at the very least I suggest you break the totals down into necessities (food, petrol, car payments, rent) and miscellaneous expenditure (or things that could be cut if you needed to, such as takeaway coffee, magazines and buying lunches).
Over a month, you will quickly see where your money is being spent and where your budget may be improved.
Another option is to get a receipt for every expense and then put them into a spreadsheet at the end of a day or at the end of a week. If you are really against the spending diary this may be an alternative but not all places will give you a receipt. If you go into a takeaway store to grab a sandwich it is unlikely to give you a receipt. From my perspective, a spending diary is an easier option.
Use an App
You may find using an app is the most convenient method for you as you already have your mobile phone on you. This is a viable option and is easy to maintain. Let us know if you use an app and how it is working for you.
The best way to keep of expenses is a personal decision. For me, the best way to manage my budget was through a combination of a spending diary and excel spreadsheet. I do maintain receipts for big purchases (for warranties) and for my tax deductions, but do not find this convenient for my every day expenses. In the future I may experiment with apps as I see this option as a viable alternative to a spending diary.