5 tips to make tracking your spending simple

www.nomoney.com.au

My wife and I have tracked our personal spending for nearly three years.

It sounds like an enormous task (we have 8 accounts between us), but it isn’t. Tracking our spending only takes a few minutes each week.

Here are 5 ways how to make tracking your spending simple:

  1. Automate: Use a good software

Using a good software is key to tracking your spending (whether business or personal).

I used to use a spreadsheet. Believe me, it was a pain. I would miss or have duplicate transactions because I always did it in fits and spurts.

Since I started to use Xero for our personal finances I have never looked back. More recently, I’ve been using QuickBooks online for my business finances.

Even if I forget for three months I just log in and get up to date. As our spending includes tax deductions, I claim the cost as managing our tax affairs (but of course it depends on your circumstances).

  1. Automate: Use Rules for common/recurring transactions

For nearly all recurring transactions I have set up rules.

So every time we buy petrol, groceries, phone, internet (and many more) these are covered by rules.

I also have a rule for less common transactions – Doctor’s visits, charities that we support.

What you can’t automate – You can’t automate everything and I find holidays or eating out means less clicking OK (i.e. less rules in action).

I also don’t have a rule for Myer as I want to track separately what we buy (e.g. gifts, clothes and household items), rather than Coles or Woolworths which is generally grocery shopping.

  1. Eliminate: I don’t track Cash amounts

I don’t track cash spending, instead have a cash expense account (e.g. Cash – Scott) and have a rule that $120 (my usual withdrawal) is put to the “cash” account. As I use EFTPOS or credit for most transactions, I don’t spend time calculating exactly what I spend my cash on (whether it is $4 I spend on a coffee or even money I spend on a night out).

  1. Regular: Track bi-weekly rather than monthly

By tracking my transactions a few times a week it is easy to remember what the random items were.

If I wait for a month (or longer) it takes me a bit longer as I don’t remember everything. Even checking the calendar doesn’t always help as transactions may occur a few days later than purchase.

  1. 80/20 Principal: Don’t let unknown transactions weigh me down

There will usually (always?!) be some transactions you don’t remember. If it is under $20, I may code the transaction to my best guess (unless of course the transaction might be tax deductible, then I would make sure it was correct.

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