where your money goes

Understanding where your money goes each month

29 Apr, 2016

If someone asked you what you earn, you could probably tell them to the nearest dollar what you get in your pay packet each week, fortnight or month. We do like to keep a close track of how much money is coming in. But what about knowing where your money goes?

When it comes to spending, we don’t tend to keep such a sharp eye on how much is leaving our accounts and, more importantly, what we’re spending it on. Which is crazy really, because how can you stay on top of your finances if you only have half the picture?


Knowing where your money goes

In a typical scenario, your wage or salary gets paid into your account and then everything starts to make its way out… your rent or mortgage payment, car loan, insurance, phone bill, utilities, school fees, groceries… you probably have a few of them set up on direct debit so you don’t even need to think about paying them. At the end of the month, you remember your credit card bill and hope the money you have left is enough to at least meet the minimum payment. You’re left wondering where all your hard-earned cash went, but then don’t bother to do anything differently the following month.

Does that sound at all familiar? Even if you can just relate to this scenario in part, perhaps it’s time to take action to break that cycle of spending until it’s all gone. And how are you going to do that? A budget. Many people run a mile when they hear that word, but don’t worry, we have plenty of articles which will guide you through the process in more detail.


Tracking your spending

Essentially, it’s very hard to take control of your money – especially if you’re already feeling the squeeze – when you don’t really know how much you’re spending and on what.

If you try and base your budget on guesswork, you’re likely to be rather optimistic in your estimations and you’ll still be left confused about where all that money is going.

To build a good foundation for your budget, you need to paint a realistic picture of your current spending habits, and that means you need to start tracking all of your outgoings so you know where your money goes. Regular fixed payments, like insurance and loan repayments, are easy enough to factor in. The hard work comes with things like groceries and entertainment which might just be a few dollars each day but add up over the month.

It doesn’t need to be a big deal, though.


Creating a ‘spending diary’

Depending on how you like to work, there are different ways to approach this. There are tons of apps available to download that will make it easy for you to enter your purchases on your smartphone throughout the day. They’ll help you categorise each dollar and pull all the information together. If you’re more of a receipts and spreadsheet kind of person, go for it. Or if you’d rather have an old-fashioned notebook, that’s ok too. Use your favourite pens to colour-code each line if you like; do whatever works for you as long as every dollar that leaves your bank is accounted for.

We’re talking groceries, fuel, clothes, lunch, dinner, morning coffees, after-work drinks, that cheeky burger, the new shoes you didn’t really need, the handful of change you put in a charity box… everything gets recorded.

One upside of being this thorough is you might find yourself starting to spend less on little non-essentials just because you don’t want to have to write them down – saving money before you’ve even made a budget, excellent!

Give it a couple of weeks of tracking your spending like this and you’ll start to build up a picture of how your expenses really stack up. Perhaps you’d never really thought about how the cost of a coffee a day accumulates over a month, or how much you spend on your car compared to your house.

Well, now you know more about where your money goes, and you can congratulate yourself on having successfully completed the first step towards getting your finances back on track for good. Now it’s time to focus on budgeting and working out which of your spending habits need to change.



  • Knowing how much we spend is just as important as knowing how much we earn
  • The best way to take control of your finances is with a budget
  • To form a strong foundation for your budget you need to keep a ‘spending diary’
  • Whether on an app, spreadsheet or paper, track EVERYTHING you spend for a couple of weeks to build up a picture of where all your money goes


the importance of budgeting Monefly

The importance of budgeting to build your wealth

27 Apr, 2016

Budgeting is one of those things that we all know we SHOULD do, but not so many of us have the time, motivation or inclination to actually do it. A bit like flossing.

The thing is, if you want to be in control of your finances and do away with that lingering shadow of debt for good, your budget is going to be your best friend.


If it’s good enough for them…

Governments have budgets (although whether they stick to them is sometimes questionable), and you’ll find that many successful companies got to where they are today with the help of a budget. It’s what lets them balance their spending and revenue and avoid building up too much debt. Having a budget is also essential for any company that wants to borrow money – the lender wants to know how the money is going to be spent and, more importantly, how they’re going to pay it back.

We can apply the same principles to our own lives and our personal finances. A budget will help guide your spending, making sure you’re in control and have enough left over each month to pay off your debts and build up some savings. It also makes you accountable for your spending; you won’t be able to gloss over those impulse buys so easily when they’re written down in black and white.

When it comes to one-off purchases like a new TV or a holiday, your budget will show you how much you can afford to spend (or how much you still need to save before you can afford it), acting as a safeguard against overspending and increasing your debt.


Budgeting is just the start

It should go without saying that just creating a budget, however detailed and impressive it may be, is not enough. The really hard work comes with sticking to it, and that takes commitment and discipline.

It might be a pretty big shift in attitude, especially if you’ve always been used to buying whatever you want and sticking it on your card, but it’ll be worth it when you start to see your debt fade away and you no longer have the stress of struggling to make ends meet each month. More of your money will be going to you, instead of to your lender, and in the end this will mean you have a larger pool of cash to enjoy in your retirement.

Is the pep talk working?


You can do this

One last thing before you get stuck in: you can do all of this by yourself; you don’t have to pay someone to work it all out for you. There are people who will charge a fee to draw up a budget for you and help you stick to it, but does it really make sense to start your money-saving journey by spending more?

There are loads of websites and apps out there that provide help, guidance and templates for free, so try to find one that suits you before you consider shelling out for someone’s services. If you are really struggling to do it yourself, look for a financial counselling organisation which will help for free or charge a minimal fee for their services rather than paying someone who’s just in it for the money.


To recap on why budgeting is so important:

  • However boring or difficult it may seem, it’s THE best way to be in control of your money
  • It’ll show you how much you have to spend and help you stick to your plan to pay off your debt
  • If you want to enjoy your retirement, you need to do something about it now
  • It’ll feel great to know you have taken this positive step to make your money work for you