How do you keep track of your spending

pauljoecoe wrote: »

How do you know how much you spent of holidays (for example) in 2017?

do you care!!??

I wouldn't be able to give you an exact figure straight away.
But if I needed to know (for example, if I was making an insurance claim due to being delayed somewhere etc) I would print out a bank statement and go through with a high-lighter marking everything I'd spent.

But most of the time no-one else cares or asks how much I spend.

I once copied several months worth of bank and credit card statements into a spreadsheet and went through line by line categorising everything.

I discovered some illuminating facts such as the amount spent on petrol each month varied depending on the amount of travelling by car we did.

Other than that it seemed to be a pointless exercise. I know some people manage to spend money they need on things they don't need without realising it, and I suppose this process may be of some use to them.

For current income and expenditure I use a system called "Where Is Finance & Expenditure" (WIFE for short). For savings and investments I have an Excel system that I built.

WIFE keeps 2 books. One is for bank accounts where every movement in or out is written in by hand. Periodically, probably weekly, the hand copy and the online banking system are compared and balanced. The second book is for credit card transactions where a record is kept. Generally the WIFE system works quite well as long as I provide a paper copy of all purchases such as a credit card slip, debit slip from hole in wall, or a printout of the receipt for online purchases. If I lose the printed copy or don't provide one, the system breaks down and I get my nuckles wrapped by management.

The savings and investment spreadsheet is much easier. There are fewer transactions for a start. I keep one tab for each savings account or fund that that I'm invested in. Since these are all within an ISA wrapper there's no need to keep details of interest, dividend or capital gains. Periodically I look online to get the latest balance and record this on the speadsheet. I have a top sheet where all funds are noted and the latest balance from each tab is automatically copied, to give me the up to date view of my situation.

My approach is to look through all bank and credit card transactions twice per week. This is primarily to check what my wife has been squandering and put a stop to it, and partly to prevent fraud.

I don't really care where or when money was spent, as long as it was justified (ie I considered it either necessary and/or reasonable value). I do care how much is spent each year in total, as that is a very useful metric for retirement planning.

I keep annual household accounts, and calculate spending as a residual, using the formula:

Consumption=Gross salary - pension saving - ISA saving - income tax - National Insurance - Mortgage + Saving interest - change in net minor debts and saving

This is intended to show the amount spent on purchases which influenced quality of life. I find this is a good approach as it ensures I don't miss anything out and don't need to keep any detailed records. Over the last 5 years my household consumption has been: Things such as replacement car purchase, new roof and travel can cause variance, eg, the spike to £33,997 was due to the wife and I spending a combined 5 months in Africa on holiday during the year. But expenditure is fairly consistent even on an annual basis, and when averaged out over time gives an excellent estimate of the income which will be needed to maintain quality of life in retirement.