Budgeting

Here’s How Singaporeans Can Perform a Spending Audit to Stop Themselves From Wasting Money

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Joanne Poh

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Government bodies and opposition political parties’ town councils aren’t the only ones who need to be audited from time to time. You, yes you, should do one too, if you’re unhappy with the amount of money you’re spending and would like to find out where and how your wallet keeps bleeding money each month.

Before you think a spending audit has to involve accountants and get turned off, hang on. An audit, when applied to yourself, simply means you inspect your cash flow. You identify stuff that you shouldn’t have spent on. And the next month, there’s a high chance you’ll end up spending less. That’s all there is to it.

If you can spend hours watching Youtube videos on DOTA strategy or have managed to amass an encyclopedic knowledge of Kpop stars, you can do this. Here’s how.

 

Track all your spending for a month

The first step is to log every single thing you spend on in a month. Take note of every cent. Yes, that includes the $2 teh tarik you dabao back to the office every afternoon. You don’t want to leave out a single thing.

For day-to-day spending, shopping and dining, the easiest way to log every cent you spend is by downloading a simple expense tracking app on your smartphone (just search for “expense tracker” and you’ll find a bunch).

Since your smartphone follows you around everywhere, you should have no trouble entering a cost into the app each time you spend money. If you’re too embarrassed to let your friends see what you’re doing, don’t worry, they’ll be too busy looking at their own screens because Pokémon Go.

But that’s not the only money that you spend each month. There’ll be other payments you make automatically by GIRO or by cheque, such as your phone bill and home loan repayments. Save all your bank statements and documents so you can log those, too.

Highlight all of the spending you regret

Now it’s time to do the real work. Look through every single item you spent on, and then highlight in as garish a colour as possible all the things you regretted spending on, or that didn’t end up bringing you much happiness or satisfaction.

If you look at a particular item and feel a surge of guilt or pangs of regret, that’s a sign you should be highlighting it! So maybe you didn’t really mean to spend $300 hanging flower garlands on that singer at the Thai disco. Or maybe you spent $25 at lunch yesterday with colleagues just because everyone was going and you didn’t want to eat alone. All of that is fair game for the Highlighter of Truth.

 

Circle all the spending that made you seriously happy

While the main objective of this exercise is to find ways you can cut your spending, it should also help you to be a little more aware of yourself and what makes you tick.

So go through your list again, and circle everything you spent on that made you really happy. Perhaps you treated your best friend to an awesome dinner and that made you feel great. Maybe you spent a bit of cash buying supplies for that picnic your friends organised. Or maybe you bought yourself a new longboard and you’re really glad you can now hipsterise yourself further.

By identifying the things you spent on that made you really happy and which you don’t regret in the slightest, you’ll start to see that it doesn’t cost as much cash to buy satisfaction as you think. That’s because if something was out of your budget or too expensive for comfort, you’d usually come away from it feeling guilty, which would place it in the “regrets” category.

 

Identify ways you could alter your behaviour to minimise spending in the “regrets” category

Your next task is to find ways to make sure your “regrets” category next month is as small as possible. This is the most pain-free way to shrink your budget. Instead of depriving yourself of things that actually make a tangible difference to your life, you want to reduce your spending on things that you would rather not have spent on anyway.

Wherever possible, write down, in the margins of your list, ways you could have eliminated the spending in the “regrets” category.

For instance, if you’re paying for a monthly subscription to a newspaper or magazine you no longer enjoy reading, the most obvious way to eliminate this expense would be to cancel it.

Other types of spending might require some creativity to deflect. For instance, if you’re unhappy about the fact that each time you meet your friends you go to a restaurant where you have more in common income-wise with the staff than with the other customers, short of avoiding your friends altogether you could suggest cheaper places or simply tell them their suggestions are out of your budget.

 

Pre-empt future scenarios where you might be tempted to make bad spending decisions

Now that you’ve found solutions to most of your spending issues in the previous month, be prepared to behave differently in the coming month in order to avoid repeating the same mistakes.

You might be surprised, but having found concrete ways you could have deflected your spending regrets in the previous month, you’re laying the groundwork to reshape your habits in the coming months.

If you want to be really thorough, you can pre-empt situations where you might be tempted to spend on things you don’t want to: getting tempted to shop during your lunch break, being heckled by the flower garland seller at the Thai pub, being invited for expensive lunches with your friends, going out on Tinder dates with gold diggers and so on.

Think of your reaction to such situations ahead of time and you’re less likely to pull out your wallet on the spur of the moment. Track your spending the next month to see how successful you were. Then rinse and repeat the whole spending audit process every few months to make sure your spending never spirals out of control again.

Have you ever performed an audit of your finances? Tell us what you did and how it helped in the comments!

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Joanne Poh

In my previous life, I was a property lawyer who spent most of my time struggling to get out of bed or stuck in peak hour traffic. These days, as a freelance commercial writer, I work in bed, on the beach, in parks and at cafes, all while being really frugal. I like helping other people save money so they can stop living lives they don't like.