There is a particular feeling that comes when you realise, mid-month, that your money has mostly gone somewhere and you are not entirely sure where. The uncomfortable feeling sits somewhere between confusion and panic, with a layer of guilt on top.

That guilt is what I want to talk about here, because the guilt around spending is rarely just about the spending itself.

What guilt around money actually is

Guilt doesn't travel alone. When it shows up in our relationship with money, it tends to arrive with a whole extended family: shame, blame, and resentment. Resentment that the cost of living asks so much of us. Blame directed at ourselves for choices that seemed fine at the time. Shame that keeps us from looking too closely at what is actually going on.

And here is something worth knowing: this is not only the experience of people who don't have enough. People with a great deal of money carry their own version of it. A different flavour of guilt, but guilt nonetheless. Am I doing the right thing with this? Could I be doing more? The anxiety around money is one of the most universal anxieties there is, and income level doesn't immunise anyone against it.

What does help, I've found, is clarity. Much of the anxiety that attaches to money comes from things we are not looking at directly. The unknown is almost always more frightening than the known, even when the known is uncomfortable.

A brief exercise before we go any further

Before getting into the practical strategies, I want to invite you to try something.

Find a moment when you can sit quietly. Close your eyes, or soften your gaze if that feels more comfortable. Take a deep breath in, hold it briefly, and exhale slowly.

Now, bring to mind the image of money flowing into your life. However that arrives for you, whether a salary, freelance income, or something else. Notice what that image makes you feel. Name the emotions if you can.

Then shift the image. Bring to mind money flowing out. Think about the different ways it goes: bills, spending, and payments you barely notice leaving. Notice what comes up in your body as you hold that picture. Name those emotions too.

Most people find these two sets of feelings are quite different. The outflow, for most of us, is where the heavier emotions live. That gap between how money coming in feels and how money going out feels is often where guilt takes root. Understanding that gap is the first step to changing our relationship with money.

Review where your money is going

Imagine your money is a liquid resource that flows. You are carrying it in a bucket that unbeknownst to you has a number of small holes in it. You find your money seems to be disappearing faster than you expect, and you have no idea why. This is how it can feel when there is an unconscious outflow of money towards things you had not planned for or recall spending on.

The fix is not to stop spending on things you really need or keep adding more money to it. The fix is to find the holes and plug them. The process is painstaking at first, but ultimately so worthwhile.

It begins with going back over the past three to six months and tracking your spending in minute detail. This means checking all the places from where money is paid out - your bank accounts, your credit card and possibly any cash spending (which might be harder to go back and track). You are looking for the full picture, not just the things you remember or are consciously aware of spending on.

Create a spreadsheet so you can put the numbers down in three distinct categories.

Fixed expenses are the predictable, regular outgoings: rent or mortgage, utilities, insurance, and subscriptions that run month after month. These don't vary much, which makes them easier to plan around. They also include things like regular charity donations. One thing worth including here is protection: life insurance, income protection, home cover. These payments can feel abstract, as their value only materialises if something goes wrong, but the peace of mind they provide is real, and they belong in your financial picture.

Variable expenses are the ones that fluctuate: groceries, transport, clothes, meals out. You have more discretion here and, therefore, more opportunity to make intentional choices. For instance, you could decide where to shop, what and when to buy, whether to pay full price or pick up things that are discounted.

Incidental expenses are the ones that don't happen every month but arrive reliably over the course of a year: holidays, gifts, a car service, and annual subscriptions. The trick with these is to add them up, divide by twelve, and give yourself a realistic average monthly figure. You can then set money aside for these expenses on a monthly basis. That way they are never really a surprise and you won’t find yourself struggling to pay for them.

Needs, wants, and the 50/30/20 rule

A ‘need’ is something that is essential to your safety, wellbeing and comfort. A ‘want’ might be that extra something that makes life more enjoyable, comfortable and could be considered a luxury.

I want to be careful here, because this distinction is more personal than it sounds. Something that started as a luxury for one generation can become, in practice, an essential for the next. Good Wi-Fi was once optional. Reasonable phone connectivity now is considered a basic human right and can no longer be viewed as a ‘want’.

Once you have your list, go through each item and label it as either a need or a want. 

So apply your own judgement. What are the things you genuinely cannot function without? What are the things that make life enjoyable, meaningful, or easier, but that you could live without if necessary?

A useful benchmark, once you have done this labelling, is the 50/30/20 rule: roughly 50% of income on needs and essentials, 30% on wants, and 20% going towards saving or building your financial foundation. For many people on average incomes, this is a reasonable starting point.

But it is only a starting point. If your rent takes up 60% of your income, the answer is not to deprive yourself of food. The answer is to acknowledge the reality of your circumstances and ask honestly: what can I actually control here? Where do I have genuine room to move? Sometimes the answer is that you need to find ways to earn more or have other sources of income.

Assessing whether your spending is creating value

There is one more lens that I find useful when looking at spending decisions, and it is particularly helpful for the larger ones.

Before a significant purchase, ask yourself:

• Will this save me time? 

• Will it free up my time for something more meaningful? 

• Will it save me money over the longer term, even if it costs more now? 

• Will it help me earn more, or do my work better? 

• And will it provide value that is harder to measure, such as joy, peace of mind, or better health?

If the answer to every one of those questions is no, that is fairly useful information. If you can answer yes to two or three, you have a good basis to determine whether the value it creates for you is at least equal to the price you are being asked to pay.  

The aim here is not to make every purchase into an exhausting cost-benefit analysis. The aim is to develop a habit of spending with intention so that when you look back at where your money went, you can mostly recognise yourself in the choices.

Creating separate pots

One of the most practical shifts you can make is to stop keeping all your money in one place and then wondering where it went. Find new buckets that don’t have holes in them!

Most banks now allow you to create separate pots or sub-accounts, and some have apps specifically designed to help you allocate money to different purposes. The principle is simple: give every pound a destination before it has a chance to drift.

A pot for fixed expenses. One for variable spending. One for incidentals, topped up monthly with your twelfth-of-the-annual-figure calculation. And, critically, one that I think of as a guilt-free pot for yourself. A ring-fenced amount, however small, that is explicitly yours to spend on what you enjoy, without any need to justify it to anyone, including yourself. You have accounted for it. The guilt is pre-emptively removed.

And then an emergency savings pot, separate from all of these. Even if you can only put a small amount in it to begin with. The act of starting it matters as much as the amount. A useful rule of thumb is to set aside three months’ income or expenses that can be easily accessed in the event of an unplanned expense or an unexpected drop in income.

On the guilt that comes after the review

I want to say something directly about what can happen when you do this exercise for the first time.

You may find things you did not expect. A subscription no one in the household has used in months. An insurance renewal that has been sitting on a higher rate for years because no one got around to calling or shopping around for a better deal. A pattern of small unintentional purchases that adds up to a surprisingly large total.

When that happens, the instinct is to turn the new information into a reason to feel bad about yourself. To calculate, in retrospect, how much money was wasted and to carry that as evidence of some fundamental failure.

Please don't. You did the best you could with the information and attention you had at the time. The right response to past waste is not guilt. It is the decision, made now, to do something different going forward. The antidote to guilt is acceptance, even forgiveness, and then action.

That is the whole purpose of this exercise: not to produce a new source of shame, but to hand you back a sense of control. To turn something you have been avoiding into something you can actually work with.

The annual check

One final thought. We tend to do a lot of annual maintenance in our lives without thinking much about it. Cars get their MOT. Smoke alarms get their batteries changed. But financial health checks are rarely scheduled with the same reliability.

Once a year, do a proper review of your spending patterns, your pots, your subscriptions, your insurance renewals, and whether your emergency fund has been replenished if you have drawn from it. Circumstances change. What made sense twelve months ago may not make the same sense now. Keeping the picture current is how you stay in control of it.

If you would like to explore this further

As a money and leadership coach, I help my clients build a clear, workable relationship with their finances, covering time, energy, and money as the three resources we have to work with.

If this has resonated and you'd like to find out more, you're welcome to book a one-off session that helps you get started on a spending review and put a guilt-free plan in place.

If you've noticed that the emotional side of money feels like the deeper challenge, the July session in the Money Matters series goes specifically into the emotional and psychological patterns beneath our financial behaviour. You can also book a session that identifies, explores and releases the negative emotions that are blocking the free flow of money in your life. 

The third session in the Money Matters series continues monthly on Saturday, 20th June, 10am to 11am BST and is titled Save and Invest with Confidence. The final one titled Your Relationship with Money is on Saturday, 18th July, 10am to 11am BST.