Archive | April, 2014

Know your spending

Expense ReportSo you have committed to maintaining positive cash flow. That is an important first step, but the real test is whether you can honour that commitment. So how will you do it?

The first step is to know what you are spending. I am sorry, but ignorance is NOT bliss. You may not like what you see, but you do need to know.

To know your spending means to know how much money is flowing out of all your personal bank accounts, credit cards and debt facilities to pay for your day to day living needs. It is a single dollar figure which you spend in a year. It will include your cash withdrawals, groceries, clothing, motor vehicles, entertainment, telephone expenses, utilities, gifts, and education costs. It does not include the interest on your debts nor one off goals that you accomplish such as a big overseas trip, major home renovation, purchase of a new car or a large cash gift to family or charity.

The best way to know your spending is to add up all the outflows from all your accounts in a single year and then simply exclude the one-offs mentioned above. The good news is that these days there are many different ways to do this depending on what suits your style. As an example, here are four methods that may do the trick:

1. One bank account that handles all payments

One way to know your spending is to keep your banking simple. If you have one bank account, out of which you pay for all of your expenses, then it is simply a matter of adding all of the outflows (debits) from that single bank account.

2. An exercise book

If you are old school, buy an expenses book or exercise book from your newsagent or stationery supplies store. Keep this book somewhere central at home. At the end of each day record the transactions you made. It may help to keep the receipts in your wallet or purse and record them in the book at the end of each day. Calculate your spending totals at the end of each day, then again at the end of each month and finally, at the end of the year.

3. ANZ Money Manager

There is a growing number of online solutions. ANZ Money Manager is a free service which allows you to link your existing bank accounts and credit cards. It then connects with your internet banking and downloads all of your transactions. It automatically categorises the transactions into expense accounts and gives you access to expense and cash flow reports. The automation is not perfect but for a free and low maintenance solution it is very good. If you are prepared to commit 15 minutes a week to maintaining your ANZ Money Manager account, you can achieve more accuracy and turn it into a powerful personal budgeting solution.

4. There is an app for that 

There is a proliferation of apps to help you know your spending and there are simply too many for me to mention here. If you think an app might be the way to go for you, log in to your app store and give them a go.


Whether it is one of the above methods, or you devise your own, it doesn’t matter. What is important is that you track your spending with a reasonable level of accuracy. Back of the envelope won’t do, because it will not give you the confidence that you need to make important decisions about your financial future. Make no mistake, knowing your spending is crucial to having confidence in your financial future, and having confidence about your future, will positively impact the quality of life you lead today.


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