Track Your Spending

The first task to improving your financial situation is to learn how to plan and control your cashflow.

Why Track Spending

It is important to assess your current spending habits. A clear picture of the current state arms you with enough information to make informed decisions. Tracking spending habits may open your eyes to things you may not have realised, or confirm everything is as expected. Making decisions without knowledge will just create more problems.

How to Track Spending

Notebook Record every purchase transaction you make for 3 months down to the last cent to ensure nothing goes missing. It will also give you a sense of satisfaction each month and it will certainly bring up some surprises. It may seem like a lot of effort but the challenge is fun. I was young when I first did this and was shocked that I spent half my money each month on entertainment of various sorts. This made me change my habits immediately and within 2-3 months I had bought, for cash, some big ticket items that I had wanted for over 5 years but "couldn’t afford".

Where to Record Your Spending

How you record your spending this is up to you. I used Microsoft Money (Quicken is also available) back in the mid 1990’s which helped tremendously with the categorisation. I chose this software due to its availability and reputation. Writing it down in a bound book or in a spreadsheet would also be useful. I now use a spreadsheet for all my financials because I can manipulate and extract the values with ease (see the included spreadsheet - Budget Template).

How to Record Spending

There’s no need to record all individual transactions (which would be tedious), but do ensure that the total for example ‘fuel’ is accurate. There’s no harm recording all detail, it’s up to your personal taste. Record your total income and subtract your total expenses. The amount left should be the amount saved or lost from your bank account. The spreadsheet above lists sample transactions to give you an idea.


For sundry items like the kids pocket money, no need to record every purchase, just call it ‘Pocket money for Little Joe’. This is discretionary spending and as long as the amount remains fixed you do not need to record the purchases.

Confirm Your Records Against a Bank Statement (Reconciliation)

Check your bank records to be sure your notes are correct. This is called bank reconciliation. Banks are very rarely wrong so they are a good marker to compare your notes against. If you find errors then determine ways to improve your skills. When you master this skill you will have some knowledge of bookkeeping.

You Do Not Exist in Isolation, Work Together

If you are doing this as part of a household, then get permission from the others to do this with them. Set workable agreements for everyone. I suggest that everyone gets a receipt for absolutely every purchase, stores it in their purse or wallet until the end of the day, and then hands it over to the person responsible. If a receipt is not possible ask the spender to write their own - date, time, amount and what for. Hopefully there shouldn’t be too many hand written receipts. Remember: this level of tracking is only for a short amount of time.

DO NOT TALLY UNTIL THE END OF THE MONTH. By tallying early you may change your spending patterns during the month and distort the reality. After the first tally you may be surprised. Don’t worry about bills you know are coming up, just concentrate on actual spending – this will be covered later.


Stop I recommend you do not read on until the end of the month, or at a minimum take no further action until this task is complete for the first time.