This is how to approach tracking your spending and why it matters

Keeping track of your spending is a valuable skill that many people engage in, while others prefer not to (and there's a lengthy list of tasks they'd rather avoid). Mia Sandgren, a public servant in Darwin on Larrakia Country, is one such individual who finds her detailed spreadsheet helpful in budgeting for her passions. Vicki Stafford, a coordinator at the National Debt Helpline, emphasizes that tracking your spending is crucial for financial control, especially when struggling to manage essential costs.

Stafford explains that it's about gaining clarity on your spending, which then enables informed decisions.

For Sandgren, tracking began when she started her first full-time job, aiming to manage her money wisely. Initially, her tracking was less precise, but now she maintains a comprehensive spreadsheet that breaks down her spending into categories such as essential, important, discretionary, emergency, and grumpy spending (including potential fines). She updates her spreadsheet monthly to reflect any spending that deviates from her expectations, whether it's a waste of $65 or a justified $1,000 holiday.

Stafford, similarly, finds monthly manual spreadsheet updates beneficial for staying mindful of her financial habits. She utilizes a separate spreadsheet for each financial year, diligently adding her household's income and expenses each month. The Australian Securities and Investments Commission (ASIC) suggests tracking your spending can reveal spending patterns, manage debt, plan for bills, achieve savings goals, and foster a sense of financial control.

For those grappling with escalating essential costs, Stafford underscores the importance of tracking, potentially leading to better-informed decisions when negotiating hardship arrangements with service providers. Stafford recommends beginning by reviewing bank statements and app transactions over a few months to discern regular and irregular expenses, group transactions into categories, and flag any unfamiliar charges or unused subscriptions.

Financial educator Ketvi Roopnarain advocates for simplicity in tracking spending, suggesting that for couples or individuals just starting, anchoring the effort to a positive goal, like a vacation, can make the process more enjoyable. Roopnarain encourages reviewing credit card statements and bank history together, perhaps as a "money date," to uncover hidden spending habits or subscriptions.

She emphasizes that while spreadsheets are effective for many, there are alternative tools like apps, bank tools, or even a simple notebook for those who rely heavily on cash. Regardless of the method chosen, Moneysmart resources, including budget planner templates, offer guidance for those seeking to take control of their finances.