The one-month detailed spending tracker is the first step in the Spending Diagnosis Toolkit. It is an exercise where, for one month, you monitor every single penny or cent that you spend, regardless of how small. You want to track your spending in every detail to build a picture of how and where you use your money. This will allow you to deliberately adjust your behavior to control your spending.

It’s one of those terms that sounds unambiguously good – of course we would want that! But what is Financial Independence? What does it actually mean? If we’re going to aim for something we should be precise in how it is defined.

Financial Independence typically means having the freedom to not work. It means that if you choose to work, you do so for reasons other than having to pay your bills or fund your lifestyle.

The first step in changing your spending is to understand where your money is going. To do this, you need to spend a little time to measure your spending.

You perhaps feel that you already have a fairly good handle on this. After all, every time you spend money, you have to pull out that credit card or count some cash. In fact, we’re notoriously bad at understanding our spending because of all sorts of psychological shortcomings common to us all.

Taking a methodical, calculated look at your spending can reveal surprising things. It’s an exercise worth doing regularly.

Not just money, but hassle too!

After going through the exercise of finding the cheapest airline tickets to my destination, I was faced with a simple problem.

We had far too much luggage. It was going to cost us a huge premium over the plane tickets to get our stuff to where we were going.

It’s one of those things we tell ourselves we can dramatically reduce. Unfortunately, the truth is that cutting out all the things you enjoy to save money doesn’t exactly lead to a fulfilling life. It’s important to spend time with the people you care about, it’s important to indulge occasionally in activities that we find satisfying. Saying “I’m never going to eat out” is unrealistic.

You can, however, say: “I will eat out only once or twice a month.” You can also decide to make it worthwhile when you do eat out. Most of all, you can make sure that when you go out, you get the best bang for your buck.

You should have an entertainment budget set aside each month. If you don’t, you’ll still spend money on things like drinks in the pub, the occasional meal in a restaurant or a comedy night with your colleagues, and those events will be guilty pleasures because they’re out of budget. Accept you’ll spend money on luxuries, so that you can control that spending.

When you spend part of your budget on entertainment, you should still be getting value for money. In this article we’ll look specifically at how to spend less on eating out.

This article deals with rentals, another article will talk about mortgages.

First a disclaimer: There is no magical technique that can turn a £1200-per-month apartment into a £1000-per-month apartment. You can’t reduce the rental cost of an existing contract. I wish it weren’t so, because it’s typically the biggest single item we pay for each month, but once you’ve signed the lease, you’re locked in.

That lease, however, expires at some point, and then you’ll be faced with a decision. To move or stay, to accept a proposed increase or reject it. To try to renegotiate or to sign without making a fuss.

One of the easiest ways to reduce recurring costs is to take a close look at your contracts and consumption and find ways to spend less on your utilities. That’s gas, electricity and water.

Utility bills sometimes feel like a permanent chunk of cost that you can do nothing about. Water rates, gas and electricity. We’ve been paying for them forever and we can’t live without them, so we just put up with them. In fact they’re an easy place to start saving money.

There is so much you can do to reduce your monthly spending it’s sometimes hard to know where to begin. On the other hand, when you want to save money, these obvious savings can be difficult to spot. That’s because your spending habits are so ingrained it’s difficult to see what you can change. It takes a conscious, guided exercise to re-evaluate your spend.

It’s also not enough to measure how much you’d like to spend and then just arbitrarily spend less – if you spend £400 a month on groceries, you’ll find it hard to halve that without completely changing the way you shop. That’s a massive change. Don’t underestimate the difficulty of reversing what is basically a large collection of bad spending habits.

In this series of posts I’m going to look at the spending categories that are common to most budgets and examine each in turn. I’ll point out how you can generate extraordinary savings by taking a fresh look at how you spend in each of these categories. You’ll see that even small changes that don’t look like they’re very significant can, over time, add up to major improvements to your finances.

Did you know that companies exploit your loyalty?

You’d think it was the other way around. In a “normal” world, companies would offer incentives to people for staying with them over time.

For example, your insurance costs would reduce, or you’d get a gradually better deal on your gas or cell phone because you’d been with the company for a few years.

The opposite is actually true.

You probably think of micropayments as a huge convenience. You walk into the coffee shop, order a coffee and then with nothing more than your phone and your thumbprint, the coffee is paid for.

It’s so easy. The phone was in your hand anyway! And there’s that satisfying “ping” and the little tremor in your phone as it signals its acceptance of the payment. So cool. The future is here!

Everything about the experience is satisfying. It’s frictionless, didn’t involve handling cash, or calculating change, it only took six seconds and with a smart watch, you didn’t even need to reach into your pocket.

Contactless micropayments are so easy!