Whilst I was at university living on a low income from student loans and temp jobs, I learned the all-important lesson of monitoring your outgoings. Tracking your spending is, without doubt, a must if ever you want to stay on top of your finances and you need to know how if ever you want to budget your income effectively.
By knowing where you are spending your money, you can identify the main areas for improvement and write a budgeting plan around this. With that in mind, here are the easiest tracking methods that I have picked up and would suggest from my budgeting journey.
Our Top Tracking Methods
1. Spreadsheet budget tracker
This is the best method for tracking your outgoings, in my opinion. By manually reviewing and inputting your expenses, you fully understand where everything is going, and you become more conscious when spending. I still use a spreadsheet to this day where I have extended it to include investment incomes and profits!
If you don’t have access to paid programs such as Microsoft Excel, you can always use Google Sheets which is free of charge! And if you don’t know where to start when creating an expense tracker or budgeting tool, there are a bunch of free online budget templates that you can just download/ copy.
I would suggest scheduling a specific time every day or every week, dependent on how often you spend, to input all your expenses onto the sheet. To ensure you do not forget any payments, you should always ask for the receipts, be it a paper version or having it emailed. You can always check your bank and credit card statements when updating the spreadsheet, however, they can often take a few days to show up in your account.
2. Use an app
If you are not a fan of manual methods, there are many apps that can automate the process of tracking your spending. The best thing about mobile apps is that they are straightforward and easy to use and you can check them whenever you want. The negative is that you are not hands-on so, unless you are checking it every day, you may eventually lose track and forget to monitor your outgoings altogether.
You can link many of the paid apps with your bank account, such as Money Hub, and it will sync all of your transactions directly as well assisting with budgeting. These apps are typically FSCS registered so not only is your money safe, but your personal information is kept secure. Many apps also allow you to set a maximum spending limit, and it will alert you if you are about to go over it.
If you want a current account and budgeting tool in one, Monzo and Starling Bank are certainly two banks to check out, each with their own Mobile App. Monzo also has a great feature that allows you to categorise each outgoing – From groceries right through to charity!
3. Physically writing it down on a ledger
This would above using an app, however, I have placed it third as you usually make mistakes when writing and have to scribble things out. Also, there is no need to manually calculate the expenses with the above two options.
A ledger is a reference book or file for classifying and summarizing monetary transactions.
Just like using a Spreadsheet, by writing down your expenses manually, you become more conscious of where your money is going. You keep a manual ledger, such as a diary or notebook, or even an electric version.
It may sound like a tedious method of budgeting, but once you get into the swing of writing it down daily, it really does become a habit! It is also very straightforward and is one of the cheapest methods of tracking your spending.
Top tips for tracking your outgoings
1. Always ask for and keep the receipts
Even in today’s digital age, we are provided with the option to receive a paper receipt for almost all the expenses we make. Or if you would like to remain green and save some trees, more and more places are now emailing electronic copies.
The best piece of advice is to always keep your receipts, at least until you have had the chance to input them onto your tracker. Do not be afraid to ask for your receipt either, should you not be offered one!
If you, like myself, find that you don’t like carrying around many receipts in your pocket or storing them until you get the chance to input them to your tracker, just take a picture of it. This also helps for those who always forget that they are in your trousers and put them in the washing machine!
I also like to ask for the receipts because there are always a few days delay between your spending and it appearing on your online bank statement. And when they do, you sometimes find that the company name or reference doesn’t match what you thought it may have been, meaning you spend more time trying to discover what it is.
2. Categorise your spending
Tracking your spending becomes much easier when you categorise your expenses and is incredibly simple. You just group your expenses by its most suited category, and you can go as granular as you want, from top-level shopping, bills, and entertainment right down to Food shopping, alcohol, electricity, and cinema.
Another thing you can do is categorise your expenses into two parts: The first is fixed expenses, and the second is variable expenses. You know that the fixed costs will not change, so you know to expect these each month, week, day, etc, and you know you don’t need to keep as close as an eye on this. The variable costs are what you need to actively monitor as they are the outgoings that can slowly bring you down.
The main advantage of grouping your costs is that it will be easy to analyse where You can easily visualise which category you are spending most on. And this leads into our final tip:
3. Fully review your expenses at the end of each month
At the end of every month, allocate some time to fully review your outgoings and identify any areas for improvement. When you review your spending daily, you will get a good idea of where things are going. When you review it monthly, you can easily identify groups of regular outgoings and locate where you are wasting money a lot easier.
Once you identify the areas where the money is being wasted (it was always some sort of food/ takeaway for me), you know to start avoiding those outgoings daily.
So, these were some of the best ways to track your spending and a few of our top tips. Just make sure you stay consistent and regularly track your expenses if you wish to see long-term results. Once you find the method that suits you best, the next step is to write your budget!
James Banerjee is an Account Director who graduated from the University of Kent in 2014. He works in SEO on clients such as HSBC UK and Nestle and he has a keen interest in personal finances and money-saving advice.