The Little Red Book

I was stocking up on stationery a couple of weeks ago when I was side-tracked by a display of familiar little red books. No, not the Little Red Book (or, to give its full title, Quotations from Chairman Mao Zedong) which has somewhat surprisingly managed to get a name check in the Chancellor’s autumn statement two years running but rather little red Cash books like the one illustrated.

little-red-book

Back when I worked in money advice we were often left baffled by clients who on paper appeared to have ample income to cover their expenses and yet in practice were consistently in default with accounts and found budgets impossible to adhere to. As a last resort we would issue them with a little red cash book (10 for £1.00 from City Supplies) with the instruction to come back to us in a month’s time with every penny (yes, every penny) they had spent written down. We had mixed results, while some clients managed to successfully record most of their expenditure just as many lost track after a few days, or even lost the little red book. Our most memorable failure however, was the client who replaced her Silvine cash book (price 10p) with a limited edition green silk bound Moleskine notebook (price £10) because the book we had given her “looked cheap”.

Was it easier or harder to keep tabs on spending then? Back before contactless, small purchases required cash in your hand or you risked the hostile glares of fellow shoppers as you paid for a Mars Bar or a packet of crisps with a debit card and had to sign! Now it is easy to tap and go for anything under £30 and while it is a real blessing not to have to find change for the bus or hand over a twenty pound note for a sandwich it has turned everyday spending into a truly casual activity, often without receipt or reckoning until a statement lands in your inbox.

The drawback with contactless and ‘one-click’ shopping is that it makes our day-to-day expenditure invisible and thus impossible to reckon without ploughing through endless bank and credit card statements. Harry, living and working in London, was confident that he spent no more £60 a month on travel. In fact the combination of contactless and direct paid Uber fares meant he was spending that every week. Likewise, while he recorded his grocery shopping as £200 a month (correct) his bank and credit card statements showed he spent the same amount again on Meal Deals and McDonald’s. Losing track of his expenditure had resulted in Harry juggling four credit cards and an overdraft that were frankly out of control.

If like Harry you are struggling to make ends meet, to manage the repayments on a loan or put something away for a rainy day it might be worth going back to basics and keeping a record of your everyday expenditure. The modern equivalent of the cash book is the budgeting app. There are a number available for download –  follow the link for a review of free apps for android and iphones by  Stepchange’s Money Aware Team. Though even they note:

“It’s also worth remembering that despite all the technology available to us, you can still use the tried and trusted method of tracking your spending with a pen and paper. You might not get pop-up reminders or colourful graphs using this method but you might find it easier than using your mobile phone”

So perhaps the little red book isn’t obsolete yet, after all.

Hilary Sams is CEO of Churches’ Mutual Credit Union and a Reader in the diocese of Birmingham