Why tracking spending is the first step to feeling in control

Some of us track our finances and some of us do not, after all, there is a long list of things we would probably rather do instead. Mia Sandgren falls confidently into the first category. Mia, a public servant on Larrakia Country in Darwin, says she is lucky to be in a position where her diligently filled-out spreadsheet helps her budget for the things she loves.

National Debt Helpline coordinator Vicki Staff says tracking your spending is an essential part of being in control of your finances, and it is even more important if you are struggling to manage essential costs. "It's really about getting clarity around your spending, and only then can you make some decisions," Ms Staff says. It might seem like an intimidating task, but experts say it is about finding the method that works best for you and using the data to your advantage.

Mia says she began tracking her spending when she got her first full-time job because she wanted to be savvy with her money. She started out with less detailed versions, but says she now has a more thorough spreadsheet that includes her expected annual expenses. "I put all my spending into that spreadsheet, and I can see how I'm tracking against what I expected [monthly]." It includes categories for essential spending, important spending, discretionary spending, emergency spending and grumpy spending, for expenses such as fines, which is ideally zero, she says. For example, yoga falls under important spending and eating out and holidays fall under discretionary spending. Mia says manually updating her spreadsheet monthly helps her reflect on her spending. A $65 expense may stick out as being a waste, but a $1,000 holiday might have been "totally worth it" looking back, she says.

Personally, Ms Staff has found a spreadsheet works best for her, too. "Sitting down once a month and engaging in a more manual way with each item of spending really helps me to be more mindful and connect more with what had been going on day to day in my spending." She has a spreadsheet for each financial year and adds in her household's income and expenses monthly, one tab for each.

The Australian Securities and Investments Commission's Moneysmart website says tracking your spending can help to spot patterns, manage debt, plan for bills, reach your savings goals and feel more in control of your money. Ms Staff says she would be hard pressed to find someone who was not confused after sitting down and recording their spending. It was tracking her household's spending that revealed her car insurance premium had almost doubled over six years. "I was paying more for less coverage and that was the jolt I needed to start shopping around."

And if you are struggling with the cost of essentials, "it's probably even more important", she adds. "It's a good first step so that then you're armed with information before you go in to try to negotiate a hardship arrangement [with a mortgage provider or an electricity provider]." If people are struggling to pay for essentials, Ms Staff says they can reach out to the National Debt Helpline.

Before tracking daily spending, Moneysmart says a review of bank statements and app transactions is a simple first step. Looking over a few months' worth of spending will allow you to notice the regular and irregular expenses, the website says. It recommends grouping transactions into categories, such as food, transport and health, highlighting bills that come up quarterly and yearly and keeping an eye out for charges you do not recognise and subscriptions you do not use.

Chartered accountant and financial educator Ketvi Roopnarain recommends keeping things as simple as possible. If your household is defined as just you and your partner, and you have not previously tracked spending or followed a budget, she says "anchoring" the effort to something fun like a trip overseas can help. "Quite often in couples, there's one person who decides, 'It's time to look at our numbers.'" Reviewing credit card history and bank statements can be quite confronting, especially if it is something you are doing together, Ms Roopnarain says. Export a period of your financial transactions into a spreadsheet, print out your credit card history and bank statements or look through them together online as part of a "money date", she suggests. It might reveal an expensive Uber habit or a membership to a neglected gym, Ms Roopnarain says.

While Ms Staff is a spreadsheet devotee, she says there are lots of other ways to keep tabs on your spending and earnings. "I am absolutely all for people using a system that is going to work for them." There are apps that you can input or allow to access your financial data, such as bank account and credit card transactions, to track your spending, Ms Staff says. Those who are time or energy poor might find one of these helpful, but many banks offer tools that categorise and track spending for free, she says. Moneysmart also recommends checking what your bank offers.

If a spreadsheet sounds right for you, Ms Staff says some basic familiarity with the software, such as Google Sheets or Microsoft Excel, will help and you can also use a template to get started. Ms Staff and Ms Roopnarain recommend the Moneysmart resources, which include a budget planner template and easy-to-follow modules. "Before buying random online templates from anyone who calls themselves an expert, check out independent free resources like Moneysmart," Ms Roopnarain says. Ms Roopnarain says templates are not for everyone and the key is finding the most "frictionless option", which could instead be a budgeting tool or an old notebook. Ms Staff says a notebook can be a particularly good option for someone who relies heavily on cash. Creating a note in your phone could also help record what cash is coming in and going out, she says.

This article contains general information only. You should consider obtaining independent professional advice in relation to your particular circumstances.