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| The wonders of keeping a spending diary. |
My top tip if you want to spend less?
Write it down.
It really is that simple.
Somehow, seeing everything I spend written down in stark black and white makes me much more aware of every purchase, and whether it’s worth it.
I first kept a spending diary years ago, when I was working as an au pair in Paris and living on the princely sum of £150 a month.
Scrap the tiny violins though, because it was actually more money to fritter away than I had subsequently as a student, surviving on grants and loans.
The bonus with being an au pair was that the family covered my accommodation, household bills, any meals eaten with them and a travel card.
However, anything else – clothes, books, toiletries, eating out, presents, travel apart from the Metro and buses and any form of social life – had to come out of the £150.
Writing down what I spent helped stop me ending up with too much month and not enough money.
Nowadays, our budget may be bigger, but a spending diary is still a real help with living on less.
So if you started the New Year needing to make your money stretch further, I recommend keeping a spending diary.
And ideally, a spending diary that captures all the the extras and day-to-day drains on your wallet.
The money for non-uniform day / Comic Relief / school trips / sponsorship for one-eyed rabbits running the marathon. The sneaky sandwich or chocolate or coffee or pester power treat that raises morale on a dismal day. The mega-expensive milk from the corner shop when you ran out. All those small purchases that add up to a big black hole of “where on earth did that go?” when you see a £50 cash withdrawal on your bank statement.
Usually, the starting point of any advice about saving money is to suggest that you draw up a budget. Yeah, great. If I knew what I spent, I probably wouldn’t need to be making a budget. It’s normally fairly easy to see what’s coming in, and some of the biggest bills going out, but that leaves a whole world of “other”.
So, I suggest a spending diary as a solution, and here are my top 10 tips on what works for me:
1. Give it a whirl.
Don’t feel you’ve shackled yourself to obsessively tracking your spending for ever and ever.
Try it for a month – that’s long enough to give you an idea of all the small spending that is zapping your cash.
If you can face keeping it up for longer, you’ll capture the less frequent payments like insurance renewals, household repairs and trips to the dentist/hairdresser/optician.
2. Pen and paper are fine…
Don’t worry about downloading fancy budgeting software or grappling with apps, unless that really floats your boat.
The important part is to track what you’re spending, so jotting it down in a notebook is just fine.
3. …but spreadsheets are better.
Personally, I love spreadsheets, which remains a source of amusement to my nearest and dearest.
What’s not to like about the ability to sum cells, play with percentages, insert extra columns or rows where you’ve forgotten stuff, and search for items? Maybe best not answer that.
Anyway, I use Excel to keep my spending diary, which is easy for me as I’m usually near my laptop. Anyone with a fancy phone (ie not me) might find that works better for them.
4. Little and often.
A spending diary is much more manageable if you keep it updated every day. That keeps it quick, and there’s much more chance of remembering what you spent when, rather than making it a big task that you put off.
5. Pay with plastic.
I know some people prefer to stick with cash if their budget is really tight. Personally, I use cards to pay for as much as possible, so my statement provides a handy record of what got spent where.
6. Ask for receipts.
If the amount is so small I feel embarrassed offering a credit card, I try to grit my teeth and ask for a receipt. And then put it in my wallet, so it doesn’t get lost. And then turf out the receipts when I get home, and make sure I’ve added them to the spending diary.
7. Check your cash.
Every few days, see whether the cash left in your purse matches the cash you reckon you’ve spent. This tends to throw up the extra impulse purchases I’ve done my best to ignore.
8. Check your statements.
Jotting down your purchases and adding amounts from any receipts goes a long way, but won’t capture all your spending. I also check our bank and credit card statements against the spending diary, and add in the direct debits and internet purchases.
9. Get your partner on board.
If you share the spending with a husband / wife / partner / high-spending dog, there’s not much point in accounting for every penny of your own purchases if your other half is flashing the cash like it’s going out of fashion.
My husband doesn’t track every Mars bar at the petrol station, but he is willing to use the card on our joint account for as many payments as possible, ask for receipts and pass them on, and keep cash withdrawals to a minimum.
10. Think about it.
If you’ve gone to all the effort of keeping a spending diary, see what it tells you. How much do all the small purchases add up? What else could you do with the money? If you scrapped the takeaway coffee, took packed lunches to work, and cancelled the unused gym / pay TV/ phone insurance direct debit, would that make a big dent in your debt, or add up to enough for a holiday?
Anyone else prepared to admit to keeping a spending diary, or are you just shaking your head thinking “this woman is completely mad”?
If you tried a spending diary, did you find it helpful, or reckon life is too short to be faffing around with receipts?
These are all sensible cost-saving tips, the sort of things we used to do all the time when we only had cash or cheques to use, i.e. pre-plastic.
One way of saving for Christmas is, when you go out, if you're thinking of having say, coffee and a toasted tea cake (our weakness!) we sometimes forego it and then when we get home I transfer the amount we would've spent from our current account into our savings account. A bit silly, perhaps, but that little amount adds up, and this could be used at the end of the year for Christmas presents, etc. I'm going to try it for a while, anyway!
Of course, not going to the shops is also a good method of not spending money: only to shop when you actually need something. Nothing is a bargain unless it's a necessity. And saving on the small things, of which there are so many, means you can spend now and again on something really lovely – perfume, books, clothes, a meal out …
Margaret P
Definitely agree that a good way to stop shopping is to stop going to shops, something that became particularly clear to me when I did my storecupboard challenge last July! I'm also keen on No Spend Days when trying to cut costs.
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PS Life is never too short for faffing with receipts!!! I check our bank statement on a DAILY BASIS. Also, I then subtract from the balance given any payments which haven't yet gone through (found under 'pending') plus subtracting any direct debits and standing orders which will go out before any further money is paid in, and that provides us with an ACTUAL balance, not the one on the statement which is often quite wide of the mark.
Once I know how much there is in the account (i.e. the real balance, not the one on the statement) I then add up the number of days until the next money in will be made and divide the number of days into the amount of money left; this gives us a daily budget over which we do not spend. As it is quite a generous budget, the fewer days we spend money, the larger this daily 'allowance' becomes. Does that make sense?
Margaret P
Don't worry, can see how the daily "allowance" gets bigger the longer you go with spending little or less. I resent paying bank fees, so I do keep an eye on the balance in our current account, to make sure there's enough if any big bills are due to go out.
If you keep a certain amount in your current account at Lloyds, then they pay 4% interst, and so each month they pay us, not we pay them! This is a super way of earning a bit extra. So we simply too the amount out of our savings account and put it in our current account and have pretended it's not there, so we only use our pension monies that go in. I've now decided to save that 'free' money towards next Christmas's expenses.
Margaret P
This is my one true money saving wonder too. It has saved me thousands.
Glad it has worked so well for you, and I'm not the only one out there!
I keep every receipt and then check it on our statement. After the thing that happened recently we have decided not to do our banking online. We go to Aber once a week so we get an up to date statement but of course get the one in the post, too. I have started a little budget plan because we are taking the boys to London in the summer holidays for a really good trip so want to get savings put by and be back on track after Christmas. Jon gets paid weekly so that takes care of shopping and fuel then child benefit, child and working tax credits are use for house bills. We prefer to pay for things in cash but not alwayspossible of course. Love to hear how people manage their funds.
Hope your budgeting results in a great time in London. Many congratulations on the big move to Wales too, hope you're all very happy in the new house.
Oh I'm keeping tight control our our limited housekeeping money this year, and ALL receipts will be kept and stuck in my spending diary which is actually a big A4 diary. I need to know where every penny goes.
Love the vision of sticking all your receipts in a big book. Takes me back to the days of my first proper job, sellotaping receipts on sheets of paper so I could claim expenses!
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