Manage Your Finances by Tracking Your Expenses
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When I was still in school, I did a myriad of small jobs (from bar tender to plumber) to be able to support my expenses. I reduced my grocery cost by purchasing with promotional codes and coupons whenever I could. At the time, money was scarce and hard to make so I had to learn to watch my expenses closely.
When I changed my job just before leaving for London, I stopped tracking my personal expenses for a few months. I spent a lot more money than I did before but I didn’t have more fun. It is important to know that tracking one’s finances does not always mean spending less. It means spending better to meet all your needs at all stages of life.
How to Track Expenses
For that I think are no two people who do it the same way. Personally, I note all my expenses down to the penny each day. I know it may seem a bit excessive for many but the truth is that it takes me very little effort. At the end of each day I add up the sum of what I spent and I note it somewhere. When I first started this habit, it was on a notepad, but now I keep track in an excel sheet. If I spend too much during the day and I’m afraid I will not remember, I take a piece of paper and I note it as I go.
The advantage of this method is that it allows you to take responsibility for spending and, more generally, your finances. If I buy that little toy which I do not need, that will mean less money for a trip or vacation at the end of the year.
In addition, it provides a comprehensive view of your money, whether you have it tied up in investments or in your savings account, it’s still the same money. You are therefore less tempted to spend some of the money you have in hand just to get rid of them.
At the end of the year, we have to make corrections (e.g. maybe on income tax which has changed), and then you must include it on your budget.
Why You Should Track Your Expenses
You must have understood, the purpose of this method is not to apply it blindly. Instead it is to understand its purpose, which is to meet your budget needs and ensure that all expenditure items are provided.
For several years now, major and minor economic crises have dotted the map. In this context, being dependent only on your salary to meet your needs and those of your family can be perceived as a significant risk. If you are one of the people who think that way, I could not agree with you more.
Just over a year ago, my only income was solely from my salary. Today it is no longer the case. I worked last year on setting up a side hustle to reduce my dependence on my employer. Since then, I continue to seek ways to increase my income sources. On your side, nothing prevents you from doing same.
Contrary to the beliefs of most people, it is entirely possible to become rich even with a modest income. The challenge will be to master your personal finances. Do not think of becoming a millionaire just by batting an eye lash. It will take budgeting of expenditures and saving a specific amount earlier in the month.
Photo courtesy of: stevepb
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