Budgeting: How Can I Keep Track of My Spending Patterns?
Positive financial management can never be void of keeping track of your expenses. You have to know where exactly your money is going on a daily or monthly basis. If you plan to win with money, then you have to change your habit with money. Believe it; the best budgetary plan is useless without tracking your expenses. There is no way you can tell if you have overspent for the month. Well, to cut a long story short, here is how you can keep track of your expenses.
Steps to keeping track of your expenses
1. Create a budget
There is no way you can track your expenses without drawing up a budget. The budget, in this case, refers to your financial plans for the month, which entails your expected income and how much you will spend on needs for that period.
The good thing about a budget is that you are in control, not the budget controlling you. A budget is like a tour guide that ensures that your money is doing the necessary thing you ask it to do.
To set up your budget, you will have to do the following:
- Clearly state and define your monthly income
- Put down your monthly expenses: you can start with necessaries like foods, clothing, transportation, shelter—rent or mortgage—and other utilities.
- After that, include other expenses like cable services, gym membership, etc.
- Then make sure when your income is removed from your expenses, it will equal zero. If it doesn’t end up in zero; you have to make some adjustments until you get to that.
2. Keep a record of your expenses
Now you have to cultivate a habit of keeping a record of your expenses on a daily basis. We mean every day because, if you are not recording all your daily expenses, you will end up living a life of false reality where the pocket never runs dry and your bank account keeps swelling like a pregnant woman. While that is good to think, unfortunately, it isn’t real.
In the real world, you cannot eat your cake and have it, so you have to keep up with the amount you spend on a daily basis. This is the key to understanding and communicating with yourself or with your spouse what is left to use in taking care of all the categories you listed in your budget.
3. Keep watch on those figures
One of the needs to track your expenses is to make sure you don’t overspend. Therefore, each time you record an expense in one category of your budgetary list, keep track of the amount left in that particular category.
Assuming you are married, you and your partner should ensure both of you are keeping records and watching the figures spent, communicating same with each other before incurring new expenses. By keeping watch over the figures you spend, you will become more communicative and accountable. By doing so, neither of you would say. “I didn’t know you spent the majority of the entertainment budget purchasing tickets to the super bowl. I wanted to sign us up for a trip to the UEFA Champions League Finals in Milan.”
When you don’t track and watch your expenses, you will end up blowing your budget.
4. Mark your spending limits
Except in an emergency, you have to stop spending once you discover you no longer have money for a particular category on your budget. This is the most important way you can stay within your budget guidelines.
Along the line, you might be tempted to see your budget as insufficient, and you may need to swap money between categories. Try not to give in, instead, wait until next month budget to make the necessary adjustments so you can achieve your aim. Always remember that debt payment and saving takes precedence over vacations and entertainment.
5. Carefully plan for surplus money
At times, your budget at the end of the month may turn up some money you did not use due to one or more reasons. In that case, you should carefully plan what to do with such monies. You can decide to roll it over to the next month’s budget for that category where the money was surplus. Assuming the surplus was from power bills, you could roll it over to cover the cost for next month utilities. Assuming it is from groceries, you can decide to transfer it to your savings.
The only way you can be successful with money is to know how you are spending it. To know how you are using your money is to keep track of your expenses. Doing otherwise will amount to failure in your financial management life.