Help & support
Many people struggle initially with budgeting because they start with an unrealistic idea of where their money actually goes. They set unrealistic limits for their spending and give up when they can’t keep to those limits.
For starters, it can help to just track your spending for a while, using a ‘money diary’ approach. Not only will you get a better sense of where you spend your money, you’ll start to notice where your big money drains are – whether that’s eating out or impulse shopping.
How to track your spending
Without even trying to cut back, simply commit to recording every time money leaves your account for a period. You can use a spreadsheet or an app, but a pen and piece of paper will do just as well.
Diligently record every purchase you make – from big bills to daily expenses like coffees and snacks – noting the date, a short description of the expense and how much it cost. Be sure to check your bank account regularly to keep up with any direct debits.
The point is to just slow down and witness every time money leaves your hands, either physically or digitally.
If it’s helpful, you can download and print out the worksheet below to log your spending.

Go the extra mile
If you like, you can take the extra step of recording a ‘N’ or a ‘W’ next to your purchases as to whether it was a ‘need’ or a ‘want’. A ‘need’ is something you can’t live without, like food, housing, utilities or water. A ‘want’ is more discretionary in nature. It’s something you could go without if you needed too, like going to the movies or alcohol.
You can also take the opportunity to assign a ‘joy rating’ to your dollars spent, as suggested by CommBank Behavioural Scientist Will Mailer.
Mailer explains that humans aren’t always great at spending every dollar in ways that will bring us greatest joy. Perhaps you’ve got that expensive purchase in your garage or cupboard, that made sense at the time.
Mailer suggests looking back over your spending and identifying the spending which brought you most joy, and the purchases you might have been able to do without.
Using this as a guide to spend in ways that bring you more ‘joy per dollar’ spent in the future, and to rethink those expensive habits that we may regret.
There is space provided on the worksheet below to assign a ‘joy rating’ out of 10 to each purchase you make. Don’t over think this – go with your gut reaction as to whether that purchase brought you joy, or not.
Next steps
Ideally, you would track over a period long enough to capture some bigger expenses, like car maintenance or quarterly council rates.
But it’s up to you how long you think you can stick at it, a day, a week or a month.
Why not make it fun and challenge a friend to also track their spending and share how it feels and any insights gained?
When you do start to write down everything you spend, you’ll probably be surprised at how it all adds up.
Tracking your spending can be intimidating at first, and it requires some time and effort. But it is by far the best way to start finding out where your money actually goes – and that is the first step to telling your money where you want it to go to meet your goals.
Congratulations, you’ve completed this lesson!
Next lesson: 3.1 - Budgeting 101: How to make a budget that works for you