It’s tedious, hard work and sometimes demoralising, but keeping track of your spending is an absolutely essential part of good money management. In today’s economic climate, many of us are living from payday-to-payday and amid the dominant rise of e-payments, it’s way too easy to lose sight of where your money has gone and how much you have left.

Learning to live within your means i.e. not spending more than you earn, is a good starting point, with a view to building some savings once you’ve steadied the ship. This starts with understanding and modifying your spending habits; but what is the best approach to take?

The manual approach

Tracking your spending manually might seem like a daunting and time-consuming prospect, but once you’ve developed an effective manner to do so and made a routine of it, you’ll find it’s easier than you expected to keep up.

There are two main ways to do this. One is with the old-fashioned notebook and pen, the other is on an Excel spreadsheet. Utilising both together probably makes the most sense, as you can combine the portable accessibility of the notebook with the processing capabilities of the spreadsheet.

Regardless of what method you choose, the system you develop is paramount. It’s important to categorise your spending, log the amount incoming or outgoing and add a transaction date. These three factors are adequate to develop a useful analysis of your spending data, but also simple enough for you to carry out easily and effectively.

You’ll want to collate your data at the end of each week or month (which is where a spreadsheet really makes sense). From here, you can recognise overspend categories, analyse your decision making and identify potential areas to cut back on.

Mobile technology

If the above seems too much of a hassle or you don’t trust yourself to efficiently carry things out, the good news is it’s never been easier to stay financially organised thanks to mobile banking and personal finance apps.

Fundamentally, personal finance apps carry out the same tasks as a manual approach would, but in a much quicker and more succinct manner. App options range from the likes of Mint and Pocket Expense, which offer a comprehensive review of all your accounts and spending, to less invasive choices like You Need a Budget, which is essentially a manual input ledger.

Likewise, modern current accounts like Monzo effectively track and categorise all of your spending you’ve made via their card, which offers a useful breakdown on patterns and habits, not to mention a counter on how much you’ve spent and how much you have remaining. Even traditional banking apps from the likes of NatWest will give you a basis to create a budget, but if you’re really interested in tracking your money, a specifically tailored app is your best bet.

It’s completely up to you how you wish to go about tracking your spending. Whether you keep it traditional or embrace technology, choose a system and stick to it, and from there you’ll be able to create some actionable data in no time.

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