A 30-day spending diary: what to write down and what to do with it

As an Amazon Associate I earn from qualifying purchases. Links marked Ad are paid links: if you buy through one, this site earns a small commission at no extra cost to you.

A budget made from guesses fails in the same place each time: the guess for food, or fuel, or "other" turns out to be well under what was spent. The simplest fix is to stop guessing for one month. Write down everything you spend for thirty days, sort it into categories at the end, and use the totals as the starting point. This article sets out how to do it by hand and how to turn the result into numbers for the Cash Buddy budget tracker.

Why a diary and not a bank statement

A bank statement shows what left the account. It does not show what the spending was for, and for a card payment at a large shop it cannot tell the weekly shop from a birthday present. It also misses cash. A diary records what the purchase was at the time, which is when you still remember.

A diary should take only a couple of minutes a day, and the value is in the total, so a missed entry matters less than a missed week. If you forget, fill in the day from the receipt or the statement and carry on.

What to record

For every purchase, write four things:

The date.
The amount.
What it was, in two or three words.
The category.

Use the same categories as the tracker, so the totals carry across without any sorting: food, transport, bills, entertainment, shopping, healthcare and other. Keep "other" small. If it grows past a tenth of the total, look at what is in it and split it.

Record the fixed payments as well. Rent, council tax and energy are not the point of the exercise, but the diary is also a check that the total you pay each month matches what you think it is, and it shows any small direct debit that has been running without you noticing. The household bills audit on the blog goes through where to look for those.

Receipts

Collecting receipts has a second use. GOV.UK's guidance for sellers says that a seller can ask a customer for proof of purchase, such as a sales receipt, bank statement or packaging, when they return something faulty or not as described. For orders placed online, by mail or by phone, it says a buyer who tells the seller within 14 days of receiving the item that they want to cancel must be offered a refund, even if the item is not faulty. A receipt in the folder is the quickest way to show what you paid and when.

For the diary, a receipt is also the easiest source for the entry, so keep them until the end of the month.

A Ad receipt organiser wallet stays in a bag or coat, and holds a month of paper receipts without a rubber band.
A Ad pocket-sized notebook goes where the wallet goes, so the entry is written at the till, not at the end of the day.
A Ad pocket-sized pen that clips to the notebook is the item you will find yourself without.

Photographing a receipt with your phone also works. The notebook is not essential if you find it easier to type each purchase into the tracker at the time, since the tracker holds an entry for the date, amount and category.

At the end of the thirty days

Add up each category. Do it on paper first, then enter the totals in the tracker, or add the entries directly if you have been using it during the month.

An example, with invented figures. The month's totals are:

Food: £310.
Transport: £95.
Bills: £640.
Entertainment: £85.
Shopping: £120.
Healthcare: £20.
Other: £60.

That is £1,330. Say that before the diary the guess was £250 for food and £50 for shopping. The diary shows £310 and £120, which is £130 more across those two lines. The gap is the useful finding, not a failure. It shows which line the budget was wrong about.

Three questions turn the totals into a plan:

Which categories were higher than you expected? Those are where a limit helps.
Which were things you would not buy again? A purchase you regret is easier to leave out next month than to cut now.
Which are fixed, and which are not? Fixed costs only change if you renegotiate them. The rest can change this month.

Work out a limit for each variable category from the totals, and add them up to set the tracker's monthly and weekly budgets in its settings, which take one total each. Start with limits close to what you spent, not what you wish you had spent. A budget you can meet teaches more than one you break in week one, and each month you can lower a limit by a small amount.

A free second tool

The Money and Pensions Service runs MoneyHelper, and its Budget Planner is a free online tool that takes about 5 to 10 minutes. It lets you enter income and spending by category and gives a breakdown. If you want a second view of the diary's totals, it is a quick check that nothing has been missed. It is on moneyhelper.org.uk.

Keeping the diary going

A common point to give up is the third week, when the novelty is gone and there is still a week to run. Two things help. First, keep the notebook where you put your keys, so it is not a separate task. Second, do a two-minute check on the same evening each day: count the receipts in the wallet and write any entries that are missing.

A Ad magnetic weekly planner on the fridge makes the check visible, and ticking a square when the entries are done is enough. Once the thirty days are over, the diary can stop, and the tracker takes over.

Do the diary once a year, or when something in your income or costs changes, such as a new job, a house move or a change in hours. The categories stay the same, and the second one takes much less time than the first.