Spending: Where Does All My Money Go?

A man shows the empty pockets on his jeans

“Where does all my money go?” I think it’s a question all of us have asked at some point. Whether that’s at 11pm  realising you can’t afford the next round, or at 11am realising you can’t afford a weekend away with your friends.

There’s not a simple answer to this question. For many of us a large proportion of the money may be going on rent (or a mortgage if you’re lucky). Other spending sources can vary from the big things – such as holidays – to the small things like your morning coffee. Hidden culprits also come if the form of recurring expenses like your phone contract, TV or gym subscriptions. Even pet care costs can quickly mount up.

The only way to work out exactly where your money is going is to start monitoring and tracking your spend. This isn’t as painful as it sounds and if you typically pay by card you’ll be pleased to hear the majority of the hard work has already been done for you! So take ownership of your finances today and you’ll never be surprised by your bank balance again!

Tracking Your Monthly Expenses

Ideally you should track your expenses for a month to get a full view of what happens from your paycheck going in, all the way to those dwindling digits.

For a quick and easy way to view your expenditure I’d recommend downloading a money management app which analyses your transaction history and categorises it into areas of spending. I use Yolt which is owned by ING Direct and is completely free to use. It’s fast to set up and provides historic data as well. If you’re not keen on downloading the app, simply find a copy of your latest bank statement.

If you often pay with cash you may also wish to keep a money diary. This can be a great way to track you spending and work out if you’re spending large sums on unplanned expenses, such as unexpected nights out or spontaneous shopping sprees.

Charting Your Spending

Using Yolt, your bank statement or money diary you can start building up a picture of how much you spend. You don’t need to spend hours on this, if you’re short on time simply make approximations for some areas. A rough start is better than no start at all!

You can download a copy of this spreadsheet to help with building a high level view. Inputting values into the table will automatically  generate a pie chart  with a visual representation of where your money goes. It’s fully customisable so you can easily delete the lines for any categories that aren’t applicable or amend the titles for them if appropriate.

Once you’ve entered your values you should end up with a pie chart similar to my one below.

Pie chart showing monthly spending

Analysing Your Result

Happy with what you see? If so you can stop here. But if you’re not happy it’s time to dig into the details of what’s costing all of this money.

As you can see above I typically save 50% of my income each month, although this does fluctuate from time to time. My biggest expense is housing (at 26% of my total expenditure), however this is significantly lower than the 38% I was paying when I first moved to London. I’m unlikely to be able to reduce this further in the short term, but in a few years I hope to swap rent for mortgage repayments.

Use your own pie chart to identify any areas of concern and then choose one at a time to drill down into. Try to identify areas where costs could be reduced, or removed entirely! Rather than trying to overhaul everything at once, I’d recommend starting with those things that have minimal impact to your lifestyle, but potentially a big impact on your bank balance. For example switching to a cheaper energy supplier or phone contract. To give yourself a head start check out this post on 50 Ways to Spend Less Money. You can compare again in a few months’ time to see what impact your changes have made.

Were you surprised by your result or was it as you expected? Let me know in the comments!

graphic of piggy bank


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