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Spending – How Do You Rate

Greg Medcraft
16th April, 2015

You may think that spending on big things is what gets you into trouble with money. But, often it’s the everyday things that end up costing you more.

Knowing where your money is going helps you control your spending and live within your means. Here are a few things you can do to stay on track.

Match your budget with your bank statement

One way to keep an eye on your spending is to match your budget with your bank statement. Look at the money coming into your account and the money going out. Use both your transaction account and credit card statements to see if your spending truly reflects your budget.

If you haven’t done a budget yet, use ASIC’s MoneySmart budget planner to plan where you want your money to go.

Do a spending diary

A spending diary is another way to work out where your money is going. This will only take a few minutes a day.

Here’s what to do:

  • First, decide how long to track your spending. Choose a timeframe you can stick to (for example, a week, a fortnight or a month). The important thing is to do it every day.
  • Get a small notebook to use as your spending diary. Take it wherever you go. Or, if you have a smartphone, download our free spending tracker app TrackMySpend. (editor note – please hyperlink to this)
  • Record everything you spend (for example, groceries, bus tickets, magazines, clothes, bills). Do this straight away. Keep receipts if you buy a few things at once.
  • Don’t try to alter your spending habits during the tracking period. Just notice where your money goes.
  • At the end of the tracking period, add up everything you’ve spent. Now you have a good snapshot of your day-to-day spending.

Check for spending leaks

What would you do if you had $840? Use it for a holiday? Pay off your credit card? Or buy cups of coffee? That’s right; just one $3.50 cup of coffee every morning will cost you $840 over a year.

Spending leaks are those small regular purchases, like a morning cup of coffee, that add up over a period of time. If you’re trying to save some extra cash, look at your spending leaks.

Spending leaks are often the fun things like drinks or entertainment. Don’t cut them out completely. Instead, choose just one or two things to cut back on. Or think of ways to spend smarter. For example:

  • Instead of spending $3.95 on a magazine every week, or $205 over the year, take out a subscription, which will cost $148 for the year.
  • A gym membership can cost around $60 a month, or $720 a year, but going for a walk or a run is free.

It’s good to keep track of where your money goes so you don’t live beyond your means. For more money management tips, including simple ways to save money, visit moneysmart.gov.au.

Greg Medcraft
Chairman
Australian Securities and Investments Commission

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