Spending Tracker

Often I ask my friends about their financial state. How much do you exactly spend each month? Most of the time, the answer that I will get is "I don't know". It just puzzles me how people don't know how much they are spending each month. This either shows lack of knowledge or they just simply don't care about their own money. They might be spending as long as there is money in their bank account and they might not even know whether their monthly cash flow is positive or negative.

Of course money spent differs from month to month due to different commitments we undertake such as paying car insurance, taxes etc. But as a person, we should know how much on average we are spending each month and whether our cash flow is positive or negative. Positive cash flow means you are living within your own means while negative cash flow means you are living beyond your means using other people's money which spells trouble in the long run.

I would really like to share my method of tracking my monthly spending. My habit of tracking my spending dated back to my high school years. I was in form 2, if I'm not mistaken when I first started to track my spending. Back then, my simple method of tracking is to print out the monthly calender template available in Microsoft Words and keep it in my locker (I was in a boarding school back then). Every time I withdrew money from the ATM machine, I will write it on the template the amount on the date I withdrew it. At the end of each month, I will roughly know how much I've spent over the entire month. I practiced this method until my university years.

When I started working back in 2004, I created a simple excel spreadsheet to track my spending (alpha version). A couple of months back, I upgraded this version (beta version) so that it can track my monthly cash flow precisely. To download my spreadsheet, please click here (it's FREE!). The alpha version basically only tracks my spending i.e cash outflow. The beta version meanwhile tracks my exact monthly cash flow taking into account all my incomes and cash outflow. All I need to do is input all my incomes and my expenses as the day goes by.

If you look hard enough over the Internet, you will actually find all sorts of free budget software. I'm actually not a fan of budget software because you can only budget so much for your fixed expenses such as loan installments and insurance premium. All others such as foods, petrol etc are not fixed and changes during the course of the entire month. Besides, making a budget is troublesome to me since I need to think ahead to project my expenses for the month. This consume time and arguably the reason why people simply don't like to track their expenses.

Having seen the budget software, I decided to come up with my own user friendly spending tracker spreadsheet. I've been doing it for more than 5 years, everyday of every month without fail. So I don't see why others can't do the same. Of course you will need to have our own will to do this. Hey, nothing is easy in this world. Even eating requires you to feed the food into your mouth. So I've prepared a few answers for the Frequently Asked Questions (FAQ):

• I'm too busy. I don't have time to do this - Perhaps, this is the most frequent answer I've heard. The solution is quite simple. If you work in the office, most probably, you will use the computer everyday. Just save this spreadsheet on your desktop. Every morning or after lunch, make it a point to update your spending tracker. If its on your desktop, its only a click away. Is that too hard? If you don't work with computers frequently, another option will be to print the spreadsheet and keep it at a place where you spend most of your time at. Just update it whenever you spend money. The moment you have the chance to update the soft copy, just do so with reference to your hard copy spreadsheet. This way you will not miss anything.
• How about the days I don't attend to my computer?, I will certainly forget how much I've spent - The days when you don't attend to your computer will most probably be during weekends, holidays or when you are outstation. The method I use during these situations is my hand phone's notepad. I will write all my spending on the notepad and update it into my spreadsheet the moment I have the chance. This way I still keep track of my spending even though I'm not around my computer. What's the use of technology though if you don't know how to maximize the usage? Be creative.
  
• It's hard to remember what I've spent for the entire day - A normal working adult will spend on a few normal items daily which include breakfast, lunch, parking fees etc. Once you've spent the money, immediately update the spreadsheet to avoid memory loss. Money spent beyond working hours, just update it the next morning. I bet your memory does not disappear that fast.

These are a few guidelines that I adhere to make this spreadsheet effective:

1. When I spend using credit card, I update the spreadsheet based on the date I use it. Not the day I pay the credit card company. This way I know I'm still using my own money to spend and I will not go overboard in spending. If you owe the credit card company, ensure that you include the interest charged when you pay them. This is technically money out from your pocket. It's considered as an expense.
2. Information on salary, KWSP, Tabung Haji are all taken from my payslip. This way I will not go wrong with these figures.
3. If you use a service which charges a fee, do include that in your expenses. Example is when you reload your Touch & Go card at ATM machines, you will be charged RM0.50 as a service fee. This should be included in your expenses since this is money out from your pocket.
4. Remember to include every cent of your expenses. Often people tend to ignore the huge impact of such a small amount. Without these cents, there will not be a Ringgit.
5. Include your monthly commitments upfront such as car loan installment, home loan installment etc. This way you will have a rough idea on how much money left for others.
6. Once you noticed that your cash flow is decreasing to an alarming level during the month, do take necessary actions to reduce your expenses for the remaining days to maintain the positive cash flow.
   

The key to remember is that this spreadsheet only serves as a monthly cash flow indicator. It does not track income from investments such as unit trusts, Tabung Haji and KWSP. I don't regard those as income. I track my investments using different spreadsheet. Money spent for investments is technically money out from your pocket since you can't use the money.

The items included in the spreadsheet is my spending pattern. Feel free to modify it to suit your spending pattern. Be creative. You don't have to make others understand your spreadsheet. It's only for you. Make sure you and only you understand your spreadsheet. No one else will be looking at this spreadsheet.

Knowing your monthly cash flow will help in planning for future commitments that you might want to undertake. It's certainly a start for more good things to come. Good Luck!