Did you know that tracking your daily expenses will help you save a lot of money? Knowing where your money is going is the only way for you to take control of your finances. So to improve your financial life, you need to track your expenses.
You are not buying anything lavish. You don’t eat at upscale restaurants. You don’t have the latest gadgets. You don’t even drive a fancy car. But don’t you ever wonder why your money is still not enough?
Get a notebook and write down all the things that you will be spending for the next 30 days. You need to write down all your cash expenses, even small purchases like candies, tips and sticks of cigarettes. There are several apps available online that you can download for free to make your tracking easier.
At the end of 30 days, summarise your expenses under two major categories: Fixed and Discretionary Expenses.
- Fixed Expenses – essentials or living expenses such as food, transportation, housing, education, bills and utilities and debt payments.
- Discretionary Expenses – non-essentials that vary each month as entertainment, travel, restaurants, vices and other miscellaneous expenses.
Once you are finished categorizing them, you will then have an idea on your spending pattern. You will also have a brief overview on what percentage of your income goes to unnecessary expenses.
Then use this data, to create your monthly budget. If your spending is more than your earning, you need to experiment and see what items you can reduce or cut down totally from your budget. Remember, your monthly income minus expenses should always be greater than or equal to zero. The money jar budgeting system is a good budgeting guide to use.
So, what are you waiting for? Begin to track your expenses now!
Updated Version. First Published in Pinoy Smart Living on 08.21.2018
Feature Image by Michal Jarmoluk from Pixabay Images.