Fully agree with Gordon and Cervelo on using a spreadsheet to track spending behavior to assist in planning.
I first starting doing this 15 years ago when I bought a house and was genuinely not sure if I would have enough to live on after the mortgage was paid.
At that time, I had an ATM card and used cash for pretty all my spending . This made it very difficult to track where my money was going.
I switched to a debit card and was then able to log into my account online and download all my bank transactions to an excel sheet.
Once a month I would take this list of transactions and categorize them as below :
ATM - cash withdrawals, I try to keep this to an absolute minimum
Car - Petrol, tolls, servicing , repairs, insurance, tax
House - Repairs, insurance, renovation, furniture, any spending in woodies, homebase, etc
Groceries - Lidl, Aldi, Tesco, Supervalu,
Bills - Gas, Electricity, LPT, Phone, TV Licence, Broadband, etc
Mortgage -
Clothes -
Kids - Sports club memberships, Toys, Kids Clothes, School costs etc
Childcare - childcare costs
Pharmacy - Boots etc
Holidays - Flights, Accommodation, etc
Medical - GP , Dentist, A&E, Physio
Consumer Services - Restaurants, weekends away, weddings, gifts, Takeouts, Concerts, Cinema, pub, taxis, Netflix, etc
Consumer Goods - Cameras. Phones, Books, pretty much anything I buy on Amazon or other online sites.
Its very easy to categorize all my bank transactions transactions into above categories based on the name of where the purchase was made and takes about 30 mins a month.
I know the average spend on each of the above categories for the last 15 years and our total average monthly spend each year.
This is great for planning as I head towards retirement myself. I know which categories will decrease and can estimate by how much.
I can estimate what our minimum spend is likely to be be (Groceries, Bills, Medical, Car, House) and where we can try to cut back if needs be (Consumer Services, Consumer Goods, Holiday) . So I have a reasonable idea what our monthly income (and hence our pension pots) will need to be for retirement rather than focusing on percentages of final salary. Until you actually put it all into a spreadsheet it is really difficult to know how much you spend. Our actual spend always seems to be more that we would expect., Its all the small things here and there as well as the infrequent larger purchases that really add up.
I first starting doing this 15 years ago when I bought a house and was genuinely not sure if I would have enough to live on after the mortgage was paid.
At that time, I had an ATM card and used cash for pretty all my spending . This made it very difficult to track where my money was going.
I switched to a debit card and was then able to log into my account online and download all my bank transactions to an excel sheet.
Once a month I would take this list of transactions and categorize them as below :
ATM - cash withdrawals, I try to keep this to an absolute minimum
Car - Petrol, tolls, servicing , repairs, insurance, tax
House - Repairs, insurance, renovation, furniture, any spending in woodies, homebase, etc
Groceries - Lidl, Aldi, Tesco, Supervalu,
Bills - Gas, Electricity, LPT, Phone, TV Licence, Broadband, etc
Mortgage -
Clothes -
Kids - Sports club memberships, Toys, Kids Clothes, School costs etc
Childcare - childcare costs
Pharmacy - Boots etc
Holidays - Flights, Accommodation, etc
Medical - GP , Dentist, A&E, Physio
Consumer Services - Restaurants, weekends away, weddings, gifts, Takeouts, Concerts, Cinema, pub, taxis, Netflix, etc
Consumer Goods - Cameras. Phones, Books, pretty much anything I buy on Amazon or other online sites.
Its very easy to categorize all my bank transactions transactions into above categories based on the name of where the purchase was made and takes about 30 mins a month.
I know the average spend on each of the above categories for the last 15 years and our total average monthly spend each year.
This is great for planning as I head towards retirement myself. I know which categories will decrease and can estimate by how much.
I can estimate what our minimum spend is likely to be be (Groceries, Bills, Medical, Car, House) and where we can try to cut back if needs be (Consumer Services, Consumer Goods, Holiday) . So I have a reasonable idea what our monthly income (and hence our pension pots) will need to be for retirement rather than focusing on percentages of final salary. Until you actually put it all into a spreadsheet it is really difficult to know how much you spend. Our actual spend always seems to be more that we would expect., Its all the small things here and there as well as the infrequent larger purchases that really add up.