Tuesday, 12 December 2017

Tracking Your Expenditure

Hands up if you set yourself a budget and track your expenditure?  Great!

If you had asked me that question a month ago I would have said a resounding “no”, but circumstances of late (that’s a story for a whole other post!) have required me to take firm control of my finances, set myself a budget and track where my money is going.


Once I got into it, it was pretty easy to set up. A little trial and error with choosing the categories, but I’m happy with the layout for now. The trick is to then USE it frequently by updating your expenditure, and adjusting your budget figures when required.

I have used Microsoft Excel as my tracking tool. Yes it is pretty basic and there are probably heaps of programs out there (Quicken, Reckon, Pocketbook etc) not to mention apps which you can run on mobile devices, but as this is my first real foray into tracking my expenditure, Excel suits me just fine.

So step one. Deciding on the categories of expenditure.
I grouped mine first by high level categories, then drilled down into the types of actual items. For example:

Primary residence
  • Foxtel
  • Broadband
  • Internet Provider
  • Insurance
  • Rates
  • Water ... 


I actually have two spreadsheet lines per item, eg Foxtel / Foxtel actual.  The first line shows the budget amount each month, and the second line shows the actual spend each month. For something like Foxtel that’s easy as it’s a set amount and does not change. This method really comes in handy for food and groceries which can easily blow out if you are not watching costs.

Step two is deciding how long a period to cover
I have started with a 12 month period, starting with November 2017 and finishing in October 2018. No need to wait until January to start this endeavour, start now!

Step three is to then estimate how much for each item you spend per month.
Good sources of tracking down this information are:
  • Credit card statements especially good for recurring payments
  • Online banking history, tracking expenditure from savings accounts, and
  • Receipts and invoices


Step four is the really scary part… entering in all those estimates as your budget figures.
I also tallied up each of the budget figures per month, the actual figures per month, and tallied those over an annual period each. Aye carumba! This is both an eye opener and a sobering revelation as it really shows you how much it costs you to live.  Mind you, for now I have not counted in holidays, major health operations, household emergencies, or any other of life’s little challenges that can eat into your finances in a big way. For that, I have always had a buffer, or if you like a contingency fund, to handle situations like these.  My budget/expenditure tracker is for my more everyday expenses.

For expenses relating to household items, my husband and I share the costs so I have calculated my share of those expenses. We each buy our own clothing, pay for our own cars, and hobbies. We’ve always done it that way. Some (most?) couples have a joint account, we tried it but it was too much of an overhead. Its easier to keep our accounts separate, and pool in for the shared items. It works for us.

Step five is the tracking part
Once you have entered in all of your budget amounts, it is now time to track your expenditure and record it. I tend to enter what I’ve spent every couple of days, especially if I’ve paid in cash as it can be easy to forget. I check my bank account and credit card statements once a week and enter in transactions from them. By entering every few days or weekly, you can really gauge how you are going against your budget amount for the month. It could make you realise that dinners have to be a little frugal for a week or so to stay under target, or takeaway coffee’s or lunches might be better substituted with homemade lunches to keep costs down. At least it gives you an indication of how you are going, and you can make adjustments if required.

Please comment below if you would like a copy of my tracking spreadsheet. I have created a template version using generic items. You can update the categories and items to suit your own circumstances. 

Please tell me readers, have you found these tips useful for tracking your expenditure? Comment below, as I’d love to hear what works for you.

                

3 comments:

  1. I sometimes think about doing this but never do...we do have fortnightly averaging for almost all our bills so our spending is a bit controlled that way, but have never had a formal budget - I’m curious if you can see if it is actually saving you money yet?

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    1. Hi Beck, I did this spreadsheet up primarily as I wanted to know how much my expenditure is, and how much it costs me to "live" for a year. With no money coming in at the moment as I resigned from my last job (my decision!) I really need to know what my true expenses are, and the need for a better way to track my spending. My savings ritual was firmly in hand before and has been for years, so I've built up a very hefty and healthy buffer. Not enough to live solely on just yet, but gives me time to work through my options for going forward for my 'second career'. Your fortnightly averaging for most bills is the smart way to go, as so often large bills seem to come in clumps.

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