Track what you spend

In 2015, I ran my first personal finance workshop, “Let’s Talk About Money” to a group of individuals who were looking to get out of debt, start building their savings and learn more about pensions. The workshop was an informal session held in a function room of a cafe in East London. The idea was to get people together to help them talk about money in a non-judgemental environment, but also to provide them with valuable insights from mine and my co-facilitator’s experiences of getting out of debt. To kick things off, we asked each attendee to write down their salary and what their ideal salary would be. Each individual diligently wrote down their figures. We then asked each individual to write down what they spent that day, week and month; their faces dropped. Then came the questions: “Do we need to write down the exact amount or can we just use an estimate?”, “What if I can’t remember what I paid for?”

Whenever a friend asks me about how to manage their money better I always start by asking, “Do you track what you spend?” The usual response is ‘no’. After a slight pause, the friend then goes into great detail about why they don’t track. After they’ve finished explaining every conceivable reason for not tracking, I ask them, “How do you know where your money is going then?” I’m often met with silence. Sometimes I’m told, “I have a rough idea of what I spend money on,” or “I’m not in debt or anything so I know I’m not spending more than I earn.” While these are all acceptable answers these responses aren’t helpful for anyone who wants improvement. By responding in this way the individual has not opened their mind to my suggestion. They’ve merely come up with further justification for continuing as they are, even when they know they aren’t happy about how they manage their money.

In both cases, the individuals knew what they earned but didn’t know what they spend. They had only been paying attention to one part of the equation: their income.

What 10 years of tracking my spending taught me

I started tracking my expenses when I was 16. I was going through a rough patch and I decided that, to move on, I had to find a way to regain control of my life. I decided to write down everything I spent for one month. I wasn’t sure what to expect from my experiment, I just knew that I was up for the challenge. One month of tracking my expenses ended and I looked at what I had spent.

The act of tracking is powerful because you inevitably pay more attention to what you’re spending knowing you’ll have to write it down. Most transactions, when not tracked, are forgotten as soon as you’ve left the shop or closed your browser. Since I was tracking each expense, when I came to look at my expenses at the end of the month I already had an idea of where most of my money was going - it still wasn’t exact but it was better than any estimation I could have made without tracking. What did I discover? Looking at my expenses from the previous month I discovered that I had spent more money on frappucinos, eating out, beauty products and magazines than I thought. I hadn’t realised that I had bought coffees, food out and beauty products. These expenses were unconscious and, ironically, got me thinking.

What else do I buy unconsciously? I already knew that I bought magazines regularly because I had a pile of half-read magazines at home next to my bed. I scanned my expenses again: coffees, eating out, magazines, bus fares, new trainers and numerous pieces of clothing. I felt like I was spending a lot for a 16-year-old with no rent or bills to pay and with a part-time job working on minimum wage. With this data, I realised that I didn’t need a lot of the things I spent money on and I started thinking about which purchases impacted on my happiness. For those purchases that didn’t contribute to my happiness, I thought about why I found it easy to spend money on these things. Was it just a bad habit? Did I feel pressured by those around me to spend more than I needed to? Was this really the lifestyle I could afford? Was this lifestyle even making me happy? Tracking for the first time showed me where my money was really going versus where I thought it was going. Being accountable for every expense meant I could learn what my spending patterns were and helped me link my spending to my lifestyle. While I was beating myself up about how some of my expenses had really added no value to my life, I realised that making myself feel guilty wasn’t helpful either. Instead, I could use the insights to motivate me to continue tracking and proactively start aligning my spending with my values.

It’s been over 10 years since I tracked my expenses for that one month when I was 16. I’ve continued to track every expense since then and continue to find value in doing so especially when it comes to my end of month review. Tracking expenses wasn’t just a good habit: it was the first habit I formed to improve my personal finances, build wealth and ultimately quit my job. Tracking expenses gave me the flexibility to improve my lifestyle.

Why tracking is the first step

At my personal finance workshop, “Let’s Talk About Money,” I recommended tracking expenses as the first step to improve attendees’ personal finances. I recommend tracking as the first step because it increases your awareness of current decisions when spending money. It’s a win-win approach: you either find that you weren’t aware of what you spent previously or you find that the data from tracking your expenses confirms that you are aware of what you spend. It’s a helpful starting point because it takes into account nobody else but you. How do you spend your money? Knowing what you spend gives you a benchmark from which to improve your personal finances. You can know how much debt you’re in or how much you earn but neither provides you with the granular detail of how you use money from day to day.

Common reasons for not tracking

I then asked if anyone had tracked their expenses before. Most of the attendees had done so previously but had failed to keep the habit up. I heard similar things from peers and friends about why they no longer or never had tracked their expenses. These are just a few of the things I hear:

"I find it tedious. I don’t really see what the value was in tracking every expense."

I grant that writing down every expense may not be the vision you had, when you were a child dreaming about what you’d be when you grew up. If you’ve already decided that it’s tedious to track your expenses, you may forget other activities that you do every day through habit that started out being tedious: washing up dishes, flossing your teeth and cooking. You kept up the tedious activities for a reason: they provided you with value. You have clean crockery to use for each meal, your dental expenses are affordable because your teeth are healthier and you eat well because you put effort into cooking balanced meals. Focus on what you’ll gain by keeping up with the tedium of tracking your expenses. Struggling to think of the gains? You can find reasons to track expenses after this section. If you already track your expenses, be proud. It’s a simple step that not everyone can put it into action easily.

“I don’t want to live my life like that.”

When a friend asked me if I was always in my overdraft, he was shocked to hear that I wasn’t. He asked if I had savings. When I confirmed, he said, “I’m always in my overdraft. Every month without fail. I don’t know why.” In an attempt to help him out I said, “You could start tracking what you spend.” He responded sharply, “I don’t want to live my life like that.” When I pushed him to elaborate he became short with me and mumbled something about tracking expenses being extreme and only necessary when you’re poor. Contrary to his claim, tracking expenses isn’t just something poor people do; many millionaires track their expenses and live by a budget as shown by research in The Millionaire Next Door. The perception of how millionaires live continues to be challenged by books that investigate the lifestyles of self-made millionaires. TV programmes show us the glitz, glamour and designer clothes shopping side of some millionaires’ lifestyles but books like Secrets of the Millionaire Mind argue that this type of behaviour is just one extreme and not representative of many millionaires. Now, when people say to me that they’re in debt but refuse to try tracking, I think to myself: I don’t want to live like that. What kind of life are you really living if you’re constantly in debt?

“Tracking makes me feel guilty.”

Tracking your spending is easy. Learning that you’ve been reckless with your spending is hard. As you record each expense you may or may not feel emotional. If you dread the thought of tracking, that’s a sign that you’ll really benefit from this step. If you fall into this category, it’s worthwhile making a note that the more effort you put into making tracking a daily habit, the quicker you’ll get used to your feelings and they’ll eventually become easier to handle. When I mentored a woman who was a few thousands pounds in debt from credit cards, I asked her to track her expenses and to try to do so every day. I also offered to look at her expenses every week, if she found it helpful. Our mentoring sessions were once every couple of weeks and before that catch up she would send me a quick breakdown of what she had spent for the last few weeks. When I asked her why she shared her spending only when we were about to meet, she said, “I’m an all or nothing person. I found it challenging trying to write everything down. At most I could write down my spending at the end of each day but even that was difficult. If I don’t have to see my spending for a few weeks until I need to share it with you, it feels more manageable.” When I asked her how she felt sharing those expenses before our sessions, what she said highlighted why many struggle to keep up the habit of regular tracking, “When I see the expenses for that long period, I either feel like I’ve done really well or really badly. There’s no inbetween.” When you don’t face your expenses for a long time, you’re not doing much to increase your awareness gradually and you risk feeling the extremes of emotion when you only track in bulk every few weeks. You suddenly see a huge number of transactions which can be overwhelming. When you track daily or more regularly than every few weeks, you get used to any feelings of guilt and start to see these emotions fade as the tracking becomes a habit - an act you do without thinking.

“I don’t have enough time or energy. I’m always busy.”

Some people assume that you need to devote a lot of time and energy to tracking expenses. The truth is that you can devote as much time or energy as you like - the key ingredient is commitment. I’m not suggesting that it will take no time to track your expenses but the quicker you realise that it doesn’t have to take up a lot of time, the easier it becomes. You can start by saving all of your receipts and making a note either electronically or on paper of all your expenses at the end of each week. You can download your transactions from your online banking and go through each expense. You can also just pick up a pen and small notebook (try and find ones that you already own instead of justifying buying new) and start writing your expenses from the last day. Like any change, if you want it to happen you’ll need to make a commitment.

We like to throw around the word ‘busy’ especially in response to someone asking us why we haven’t done something. We play tag with the word busy. You might be familiar with this: Me: “I sent you a text, but you never got back to me.” Friend: “I’m sorry I didn’t respond, I’ve been really busy.” Sometimes I’m the busy one and sometimes they’re the busy one. Why does using and hearing the word ‘busy’ frustrate us? Because when we say we’re busy, we’re admitting that we haven’t made our friend a priority. When our friend says they’re too busy to respond to you, we feel like they haven’t made us a priority. By saying upfront that you’re too busy to track your expenses, you’re admitting that you not making money management a priority. One half of The Minimalists, Joshua Fields Millburn, argues that busy is just another word for being unfocussed. “Being focused, on the other hand, involves attention, awareness and intentionality. I don’t commit to a lot of things, but the tasks and people I commit to receive my full attention.” Ask yourself: how can I shift my schedule so that I can commit to tracking my expenses?

“I find more value focussing on increasing my income.”

Income provides your primary means for spending money. If you don’t have any kind of passive income or an inheritance to live off of, then you’ll need to find a way to earn money actively (by becoming an employee or setting up your own business) or passively (by living off of investments). While your income is important, if that’s the only thing you focus on, you’ll be at risk of lifestyle inflation - matching your spending to your income. Spending all of your income isn’t necessarily bad; feeling it’s compulsory to spend all of your income is. When we get a payrise it’s easy to justify getting a smartphone upgrade or booking a holiday. Before we know it we’ve already spent our payrise for the next year in just a few weeks. The problem with focusing solely on your income is that your needs and expenses - either consciously or unconsciously - inflate in line with any increases in income to the point where you no longer feel the benefits of a payrise. Before long, you’ll want another payrise. This doesn’t mean that you should ignore your income altogether - it plays a vital role in supporting your lifestyle and growing your wealth. You can only cut your expenses to a point on a certain level of income to grow your savings. Without knowing whether you’re spending that money on what’s important to you, it can be easy to just spend what you earn.

It’s also worth considering that there are additional costs that come with chasing your income. If you spend more time working to get that promotion, you’ll likely be more stressed, have less time outside of work to look after yourself and also have less time to spend with friends and family. No matter how much money you have, you cannot pay for good health. You have to work on it consistently which requires commitment and time. If all of your time is focused on earning an income, how do you expect to stay in good health? Regardless of what you earn, if you spend your entire paycheck you’re no better off financially in the long run. What’s a winning approach? Focussing your time on both increasing your income and managing your expenses.

“I already know what I spend my money on.”

Perceptions are a filter of reality. As human beings we all have perceptions. Without having a record of every expense, it’s difficult to prove whether we really know what we spend money on because we’re clouded by our own biases. Even after 10 years of tracking, I consult my expenses data regularly to see where I can make further improvements. I still catch myself wondering why I spent X on Y when I hadn’t done so in months prior. I also find myself wondering why I haven’t spent more on investing in my own education.

Tracking your expenses shouldn’t be treated as a one-time event. If you track your expenses even for just six months, you’ll find ways to be more efficient with your spending and ways to align your spending more with your values, as you learn more about yourself. I have looked at my expenses and noticed that I don’t spend enough money on investing in seeing friends regularly - relationships have a big impact on my overall wellbeing (I am constantly learning from my friends). I increased my allowance to spend on socialising for the month after and felt better for it. Those patterns in spending didn’t matter to me 10 years ago though. As I’ve gotten older my needs and wants have changed, so my spending priorities today look very different to what they were when I was a teenager. Tracking isn’t simply a way to beat yourself up about your spending. By increasing your awareness, tracking encourages you to spend your money on what’s important to you. Be flexible and accept that what’s important to you may be very different to what’s important to your friends. What’s important to you may also change with time.

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Benefits of tracking

There are many reasons for tracking expenses. If you already do then you’ve kept up the habit because it has brought you value. What starts out as a small step to regain control can quickly become addictive. When I was trying tracking for the first time I never thought it would become a habit for life. Over 10 years later, I may not find myself having an epiphany at the end of every month, but the habit has become one of my security blankets - my main way of staying accountable to my spending. I know that I have constant access to data on my spending which is helpful if I want to change jobs or change my savings goals.

When I spoke to those who do track and have tracked their expenses for some time, I see enthusiasm and conviction. They’re all convinced that it’s changed not only how they spend, but how they earn and save their money. James* kept his tracking to himself for many years. He thought that others would see him as weird even though he was convinced that the exercise was invaluable. When the subject came up, people were vocal about how ‘he was tight’ for tracking. Despite the criticism of those around him, he knew that they would never get it. They insisted that he wasn’t ‘living life’ if he was tracking every penny. He knew deep down that tracking enabled him to save and meant that he never took out consumer debt. Over 10 years since tracking, James is 100% debt-free. He paid off his student debt recently with his savings.

Face your financial reality

Armed with a month of expenses you can see at a glance whether you spend more than you earn. That discovery alone may give you the push to stay the course and keep tracking. Tracking alone won’t get you to spend less but seeing your financial reality gives you confirmation that you’re either living sustainably or you’re headed for a debt spiral. Whichever path you are on, the data you have can help you figure out what steps to take next when managing your money. Do you need to cut back on something? Or do you need to increase your spending in certain areas? Could you put more into savings next month?

Question whether you’re living in line with your values

With tracking you account for every penny you spend. When you start seeing this level of detail in your spending you'll inevitably question why you made that expense in the first place. This isn't just about seeing that you spend £2.50 on a fresh juice every morning because fresh juice may be an important part of your morning ritual and an important part of your health routine. On the flipside, if you notice that you spend £100 pounds on a pair of hiking boots but you’ve never been hiking before and usually just wear a pair of trainers when walking, you’ll start to wonder whether that was a worthwhile investment. That’s not to say that you should plan every expense that you make so that it’s in line with your spending - although some choose to do this. Tracking your expenses shows you what you’ve chosen to prioritise whether that’s in line with what you actually want or not. Your Money or Your Life recommends that as you become familiar with tracking your expenses you can start to track how aligned your spending is with your values by assigning a value score to each expense.

Know what you can afford (and decide if you really want to be able to afford it)

When you’re about to pay for something, you may pause for a moment to think about whether you can afford it. Quite often this is a generic question that only goes so far to ask you whether you can afford the financial cost. There are other costs that we don’t always consider when making a purchase. Can you also afford to look after the item? Will you need to invest more money in it to retain its use e.g. insurance, repairs? Do you have space for this item in your life or will you need to buy additional storage to keep it? Do you have time to care for this item, to keep it clean and in good working order? If you don’t find yourself wanting to answer these questions, it’s well worth considering whether that purchase is something you even really want.

Financial goals become measurable and easier to attain

I recently asked a friend who I consider to be switched on when it comes to money about tracking expenses. She cuts her expenses regularly without feeling deprived, saves diligently and knows what’s important to her; she lives life on her own terms. She admits that she monitors her spending by checking her bank account regularly but wishes she tracked her expenses more formally, “I want to see where I can make savings and also set more accurate savings goals.” It’s tempting to set a savings goals without really giving our expenses much thought. It’s only when we realise it’s a lot harder to save because we spend more than we plan to. On the flipside, when we look at a month’s worth of expenses, we can be more realistic when we forecast our spending. We’ll more accurately be able to judge whether our savings goal is achievable. If we’re really motivated by the savings goal we’re more likely to be creative with how we spend in order to achieve our goal and it’s easier to do this when we have an accurate picture of how we spend.

Understand what you prioritise

Actions express priorities. - Gandhi

When I first analysed my spending, I noticed I was spending a lot more money on magazines and beauty products than I thought I was. It wasn’t so much that it was a lot of money but that it was more than I thought. Why did this concern me? Because it didn’t reflect on what I believed were my priorities. I had unintentionally made beauty a priority. Similarly, we can claim that saving money, getting out of debt and building wealth are our money priorities, but if this isn’t reflected in our spending it’s just something we should be doing, not what we’re actually doing. Whether we meant to or not, we prioritise certain expenses which we only become aware of when we track all of our spending. It’s important to recognise that by tracking our own expenses and recognising what we’ve focused on that we’ll question whether they’re our priorities. If they’re not, we have the data we need to help us start aligning our spending with our priorities.

Become more intentional with spending

Similar to the point above, it’s only after we realise that our spending is either in line with or not in line with our priorities that we can start being more intentional about how we spend. If we consider health a priority, then we can be more intentional about what food we buy. If we consider saving a priority, then we can look at our expenses and identify those expenses that don’t bring us value, cut back on them and put the money saved into a savings account.

Identify spending patterns

When we record our spending, we start to identify patterns. We may notice that we spend a lot more on our groceries than we thought. We may then remember that we saw things that were on special offer e.g. buy one, get one free, so we decided to stock up and pay more for our groceries than we would have done without the offer. We may notice that every Friday night we get a takeaway to share with our flatmates. Social rituals can have a big impact on how we spend because without our own intention of spending it can be easy to get caught up with spending the same amount as those around us. We can also identify subscriptions that we no longer get value from and start cancelling these to free up money for spending that brings us more value.

Spot fraud and bank fees

Taking out cash when it’s convenient can add up if we don’t pay attention to ATM charges. Banks will find ways to punish our spending if we go overdrawn or if a direct debit bounces. If you track your expenses and compare that with your bank statement or after-tax income each month, it’s easier to spot gaps in information and differences in balances. If you notice a discrepancy you can look at your bank statement again and scan for unexpected fees that your bank charged you last month. You may even be able to contest those charges. Since it’s easier not to look at our bank statements when we don’t feel good about how we manage our money, the problem only compounds. One fee could be enough to make us go overdrawn, after which the bank may charge us daily for using their overdraft facility without authorisation - we’re unaware of this until we start paying attention to tracking.

Settle disputes

One of my friends who has tracked their expenses for nearly 15 years, once used his spreadsheet to show that he did not owe any money to his flatmate. When you’re living in shared accommodation and each flatmate is responsible for a different bill, it’s essential to know what you’ve spent even if your flatmates don’t track their expenses. When a dispute arises amongst friends or family, it’s hard to prove who owes what when nobody tracks. It takes just one person to track their expenses to have a more accurate picture of who owes what. Still, there is a certain amount of trust that you need to have in somebody who tracks to settle a dispute, but it’s a lot easier to believe them over people who have no records.


There are more benefits than I can list here because the point is we all derive different kinds of value from tracking. I found the process liberating. I felt in control of what I was spending even though I hadn’t started cutting back. I was merely tracking when I started feel relief. I knew deep down that I was moving towards something better. If you’re unsure what benefits you’ll gain, ask yourself: how might my life be better if I track my expenses?

Tess* experienced similar liberation. She’d always been a natural saver even though she hadn’t always tracked her spending. When she decided she wanted to save more, she started using pen and paper to track her spending. She found the process liberating because she was suddenly aware of where her money was going. She regularly challenges herself to spend less than the previous month - just to see if she can. If she wins one month, she’s saved more money without compromising on her happiness. If she doesn’t win the next month, she still wins because she’s still increasing her savings without compromising on her happiness. She felt liberated because she felt so in control of what she was doing. She was spending and saving with intention.

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The benefits of starting early

Being in your 20s, creating habits are arguably easier than in your 30s, 40s or 50s. As the expression goes: You can’t teach an old dog new tricks. I don’t agree with this expression but I strongly believe that the younger you are, the easier it is to start and keep a good habit. When I first started tracking my expenses when I was 16, my spending was simple. I didn’t have to worry about tracking rent or mortgage payments, groceries, car payments or car running costs, and travel until I left home at 18 to go to university. Even then, it wasn’t challenging to add in living costs to my tracking because I’d already spent two years tracking my discretionary spending on clothes, seeing friends and magazines. If you’re in your 20s, unmarried and have no dependents (children, elderly parents, siblings to support financially), then your time now is relatively unburdened. Your expenses may not yet include mortgage payments, car payments, childcare costs. Depending on how you spend, you’ll have the fewest transactions to track in your 20s. Once you’re in your 30s, married with kids, you’ll have more responsibilities but less time (and perhaps less motivation) to track your expenses. If you’ve started the habit of tracking in your 20s, it’ll be easier to continue this habit into your 30s, 40s and so on. Similarly, noticing your spending weaknesses or patterns of spending that are not sustainable in your 20s can help you can nix these spending patterns before you take on the responsibilities of a mortgage, car loan and childcare.

If you went to college or university, you already know what it’s like to live on a small income each month. When you start tracking your expenses, it becomes easier to make that small income go further because you quickly learn to sacrifice what’s less important to afford what is important.

Research on tracking

Psychologists have conducted experiments to find out more about consumer behaviour and there are findings to suggest the positive impact of tracking expenses on wellbeing. Two Australian researchers, Ken Chen and Megan Oaten, designed a four-month experiment where participants were instructed to write down every purchase. It took time for the participants to get into the habit of recording expenses, but once they did, the researchers found that participants’ financial lives improved. They also found that participants smoke and drank less, ate less junk food and even found they were more productive at school and at home. Charles Duhigg, author of The Power of Habit, writes, “As people strengthened their willpower muscles in one part of their lives - in the gym, or a money management program - that strength spilled over into what they ate or how hard they worked. Once willpower became stronger, it touched everything.” Taking James* as an example, he started by just tracking his expenses. He then realised he could also track his income at the same time and then he started tracking his contributions to his retirement account.

One of the benefits of tracking is increasing your awareness of what you spend. You question your purchases more. As soon as I started tracking, I noticed my impulse buying tendencies. Purchasing items on impulse created an immediate sense of joy but that feeling was shortlived and quickly followed by guilt. That guilt motivated me to take a positive step to manage my personal finances and regain control over my spending. Researcher Sunghwan Yi, professor at the University of Guelph in Ontario, asked 222 college students how they felt after buying something on impulse and what coping strategies they used to handle the situation. Students reported feeling guilt and/or shame after making an impulsive buy. “Participants who felt guilty about the impulse buying used proactive coping strategies, such as adjusting budgets and planning to reduce impulse buying in the future. On the other hand, shameful buyers used more avoidant emotion-focused strategies, such as denial and reframing the incident to be less injurious to the self." When you track, do you feel guilt and/or shame? How do you cope?

How to track

The simplest way to begin tracking is using a pen and notepad. You have to remember what you’ve spent and note it down, so using this method daily is simple but effective for accurate recording. If you’re prone to misplacing things or want access to the information anywhere in the world, it’ll be better to use a digital method for the long-term. Since many of us spend our money digitally using credit, debit cards and online banking, an online finance app may be more effective at gaining a clear view of your spending.


Spending Tracker by MH Riley Ltd

Cost: Free
Operating system: iOS
Track all of your spending, earnings and savings. This app syncs across your other Apple devices including iPad. Create your own categories. Creates graphs from your data so you can easily see whether you’re spending more than you earn. (US/Canada only)

Cost: Free
Operating system: iOS, Android, Windows
A popular app for managing your earnings, spending, savings and budgeting. It syncs up all your accounts, from bank accounts and mutual funds to your retirement accounts.

Cost: Free
Operating system: Android
Choose your spending categories and track all of your spending.

The Life-Life Abacus (coming soon)
Cost: Free
Operating system: Windows
I prefer tracking my expenses using an excel spreadsheet that lets me tailor my categories. I don’t like using my phone to track because I started tracking before apps were available. If I get tired of using a spreadsheet I will switch to using my phone, For now The Life-Life Abacus helps me track my spending, earnings and savings.

Be flexible about the method you use. It may take a few weeks of experimenting with a pen and notebook, app or spreadsheet before you find the method which you can sustain over a longer period of time. Even if you’re sceptical about the value of tracking, the only way you can be really sure it’s not for you is by trying it.

In summary:

  • Find a reason to start tracking. Think about what you can learn about yourself from tracking your expenses. Focus on the potential gains of tracking your expenses.

  • Acknowledge your scepticism but don’t use it as an excuse not to try diligently tracking for at least one month.

  • Experiment with different ways of tracking to find the one that resonates with you.

  • Ask: how might my life be better when I track my expenses?

  • Start today. The earlier you start, the easier it will be to track and the more years you will have to benefit from the habit.

*names have been changed

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