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Money saving

Are you leaking money? Part 2

Posted 04 October 2015

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Keeping a spending diary is a really simple way to track your spending, putting a successful budget in place and saving some money.

So, yesterday we told you why a spending diary is a good idea. We’ll continue with that today, as well as explaining how you actually keep a spending diary. Let’s crack on.  

Patterns will emerge

Keeping track of not just what you spend but when you spend it, will allow you to see whether there are certain situations that trigger over-spending. For instance, maybe you’ll notice that you spend more when you go to certain area of town or when you’re out with someone in particular. You might not necessarily have to avoid that area, or stop going out with that person; just having the knowledge should make you more mindful of your spending, if you find yourself in that situation again.

It’ll help with your budget

You can try to put a budget together without detailed information about your spending, but it’ll not be much use. Why? Because it’ll be based on guesswork, not solid facts about your spending habits. Of course you could just use your memory and your bank account statements, which will give you a fair idea of what you’ve spent, but crucially, it’ll not tell you what you spend your cash on. And this can often be where the most uncontrolled spending happens – the odd coffee here, a magazine there – it all adds up.       

So how exactly do you create and keep a spending diary? It’s really, really simple. Here’s what you do:

Get yourself a notebook, the paper kind if you’re that way inclined, or an electronic one, like the notepad function on your mobile phone for the more tech savvy among you. You could even use something like Spending Tracker, it’s a free app that literally does what it say’s on the tin – it tracks your spending. That’s only an example, we’re sure you’ll find plenty more, just choose one you like the look of and preferably costs nothing.  

Once you’ve chosen which method you’d like to use, start recording and don’t stop for at least a month, so you get a really good idea of where your money is going. When you’ve finished this process, you’ll have a pretty good idea of what you need to do to plug the holes. 

Using the information you’ve gathered formulate a plan to address any problem areas. For example, you notice that you simply cannot resist over-spending when you pop out of the office at lunchtime. There are a couple of simple fixes for this problem:

1.       Take a packed lunch so you don’t have to leave the office at lunchtime

2.       Leave your card at home, so you have only what you need to spend that day, nothing more

Work your way through the problem areas you can identify and see what solutions you can come up with. Job done!

So there you go. By our reasoning it’s a pretty good idea to start documenting what you spend your money on – we’re even having a go ourselves!

 

And finally, we love hearing from people who have turned their financial situation around and got in control of their outgoings so let us know on Facebook or Twitter if you have any diary success stories. 

by Christine Walsh

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To find out more about managing your money and getting free debt advice, visit Money Advice Service, an independent service set up to help people manage their money.