Diana Clement: It's time for a spending diary exercise

Start a spending diary. What have you got to lose? Photo / 123RF

OPINION:

Inflation is hurting, and our spending habits have changed over the past two-and-a-half years. It's time for a spending diary exercise.

It involves keeping a diary of every cent you spend for a month, sorting it into categories and analysing it. Spreadsheets or budget apps help. Even if you budget, the point of a spending diary is to take a reality pill, sweat the small stuff, and work out what could be done better.

This year I've compared my July 2021 and July 2022 spending diaries. It may sound surprising, but my spending went down. That's because 1970s-like inflation has been a big wake-up call for me to be more mindful about certain spending.

My grocery bill for July 2022 turned out to be only $2 more than July 2021. That might sound surprising given the crazy price rises we're seeing at the till. For that exact reason, I've become way more mindful about what goes in my trolley. I have been more careful to eat the food in my home before buying more, and not adding "what the heck" purchases. I've been making fewer trips to the supermarket, meaning fewer temptations, and cooking from scratch more.

Shop carefully and make the most of what you buy by freezing vegetables you have an excess of.

Be more mindful about what goes in your trolley. Photo / Getty Images

The vast majority of products on supermarket shelves aren't essentials. I was musing about that while perusing a Māngere supermarket's shelves for another article. Even in lower-decile areas than I usually shop in, most people's trolleys include a lot of non-essentials.

Try to avoid online shopping when you're enjoying a beer or wine at home, it'll rarely be an essential purchase.

Surprisingly, my electricity bill has dropped significantly. That's most likely partially due to the aforementioned mindfulness, but also having changed much of my lighting over from halogen to LED in the past year, which will take time to pay itself off. Switching to a better power deal could help you here too.

Not a surprise was that my exercise spend had gone down, thanks to doing YouTube workouts in my garage in preference to $20 gym classes that fell by the wayside during lockdowns. A drop in vehicle costs was, again, down to mindfulness, which lead to an increase in cycling and car-pooling.

The great thing about a spending diary is it highlights the untruths in our mental accounting. The first time I ever did this exercise I was in my 20s and found I was spending more at wine bars than the supermarket. Oops. That was a life-long lesson. Over the years my periodic spending diaries have put the spotlight on the more elastic corners of my budget.

Everyone has what I call a category of shame. The one where if you're truly honest with yourself, your spending isn't essential. Many people manage to hide this spending in their supermarket bills, home or vehicle expenses. Things like two cars when one would do, or fancy home accessories accounted for under maintenance.

The category of shame for me is almost always the coffee/eating out category, which includes takeaways and snacks. It dropped by $177, from July 2021 to July 2022. After patting myself on the back, I realised that I was fooling myself. The difference was two lunches out with the entire family in 2021 for special events. It's this type of insight that a spending diary is good for.

Not every category can be controlled. Especially rent and mortgage for most people, although navel-gazing can help. If money's really tight can you rent out rooms, or move somewhere smaller?

One thing to be careful of with a spending diary is how you slice and dice your money. I used to lump my weekly bottle of fine wine in with groceries, whereas now it goes to entertainment. Alcohol is not an essential. Everyone is different, but it's important not to tell yourself untruths, as I used to when the wine was classified as groceries.

Finally, one month's spending diary doesn't give a full picture. But give it a whirl. You have nothing to lose.