How to track your spending without going mad

By Marianne Curphey

You've probably heard this advice: If you want to keep your spending under control, you need to track it.

Yet, just like going on a diet, the concept of trying to impose a strict financial regime can be intimidating.

So how can you track your spending without it becoming a time-eating chore? Here are some tips for getting your outgoings under control -- and keeping them that way.

Understand your spending
Before trying to impose new rules and new budgets, understand why your spending is a problem.

"Our spending patterns are often not regular or consistent, and we spend for emotional, rather than rational reasons," says Karen Pine, professor at the School of Psychology at the University of Hertfordshire and co-author of Sheconomics, a money management book for women. "We all have good days, bad days and stressful days when we feel frustrated, and spending money has become one of the ways we regulate our emotions." expense-tracking

In other words, spending is one of the strategies some have developed to cope with the ups and downs of life, and is, in a real sense, "retail therapy".

"Just like comfort eating, a lot of people indulge in 'comfort spending,' " Pine explains. "If you are trying to cut down on your spending then it can be useful to be aware of your triggers -- ie, what motivates you to go on a spending spree."

Take control by keeping it simple
So if we are emotional creatures, driven to spend for a variety of reasons, what can we do to track and control our spending patterns?

You don't have to rig up a complicated spreadsheet or rely on technology.

"There are some great apps out there to help you track your expenditure, but there is also nothing wrong with pen and paper by bedside table -- you can fill it in at night time," says Nina Grunfeld, founder of Life Clubs, which provides workshops on a variety of subjects, including money management.

Independent financial adviser Philip Pearson suggests an even more hands-on approach.

"Keep a spending diary in a notebook that you carry around with you, so that you can note down everything you spend, when you spend it," he says.

Although being tied to an expense diary might seem daunting, it's the trick to plugging small money leaks.

"Often it is the incidentals-- the small things -- that we forget that all add up," Pine says.

If keeping track of multiple daily expenses becomes overwhelming, consider downsizing your financial life.

"Just have one bank account," says Yvonne Goodwin of Yvonne Goodwin Wealth Management. "Keep it simple or you may find it easy to overlook annual spends like car or house insurance, which can be expensive."

Whittling down your financial life also means foregoing credit cards -- at least temporarily, Grunfeld says. Because credit cards allow you to spend money you don't yet have, they can make tracking your spending accurately much more difficult.  Once you have your money under control, however, consider using your credit card occasionally to build up your credit rating.

Make it a habit by making it fun
While carefully tracking your money may not seem as fun as spending it, don't let that stop you.

"Once you start, you may be surprised at how gripped you get by money," Grunfeld says. "And, don't forget, once you've been doing something for 21 days it becomes a habit anyway."

You can even turn expense tracking into a game by setting yourself a challenge.

"In Big Brother, they used the weekly shopping task," Grunfeld says. "They would have £1 per head per day, so imagine you are in a game show like that."

Grunfeld also recommends taking your weekly allotment out of the bank in cash to give yourself a visual representation of your money and how quickly it is depleted.

"Have a go at setting yourself a daily budget (such as £10). If you spend less, it rolls onto the next day, if you go over, you have less to spend," Grunfeld says.

Useful money-tracking apps
If you're finding it difficult to stay disciplined in your expense tracking, here are some personal finance apps to play with.

Spendometer: This app enables you to set yourself a budget, log your spending and view your spending reports -- all on your mobile. It easily allows you to see how much of your money has been spent so far in a given week or month.

Piggie:  Piggie helps you keep track of where your money goes. Every time you open your wallet, you input details of how much you have spent and what you have spent it on. The app keeps a tally.

Billminder: Billminder lets you to keep track of all your bills, when they are due and when they need to be paid. In addition to helping you track your expenditures, this helps you avoid late fees.

Another option: track your spending with a worksheet. The Sheconomics website has a downloadable Excel spreadsheet to keep tabs on your expenses.

See related: Tips from the pros: Sorting your financial clutter, Blogger Q&A: The Diary of a Frugal Family

Published: 12 September 2012