Tracking your spending helps you identify some financial issues that you can easily correct, which will make a huge difference to your money matter
Have you ever experienced a situation when you have money but you really don’t know how you spent it all? Keeping track of your expenses is essential for your finance but people find it difficult to do just that.
If you don’t already keep track of your monthly expenses and you try it out just once, you will be surprised how much money you spend without even realising it.
Tracking your spending helps you identify some financial issues that you can easily correct, which will make a huge difference to your money matters.
Here are easy ways to track your monthly expenses
1.Categorize your expenses
The first thing to do is to categorize your expenses. There are two types of expenditure; fixed and variable
Your fixed are your regular monthly expenses that really don’t change while your variable expenses are those expenses you can adjust at any time.
List out all your regular monthly expenses. The bills you need to pay regularly like car loans, utility bills, mobile,data plan subscription and so on while your variable expense is the money you spend on food, clothes, travelling etc.
Categorizing your expenses helps you know how much you have spent in a month and is one of the most important things you can do to start of your new way of saving money..
2. Review your expenses
After categorizing and checking how much you have spent, the next step is to review your expenses. You need to look for areas you spent a lot and you can improve on.
Look for ways to save more after you have reviewed your expense.
You can improve your spending by cutting back on some expenses you don’t really need such as fast food and cutting back on drinking.
You should also review those big projects you embark upon like buying a car, building a house and so on. They are expenses that don’t come up regularly but they really dip into your finance. Reviewing such irregular cost will create room for better financial planning for emergencies.
3. Create a plan.
After categorizing and reviewing your expenses, create a spending plan to make it easy to track your spending.
You need to also set some financial goals like building an emergency fund for any unforeseen issues that may arrive. The key to planning is to be well-prepared for any eventuality..
4. Use money apps to help you track your spending
People might find it difficult to track their monthly expenses using a spreadsheet.
Instead of going through the stress of tracking your monthly expenses with a spreadsheet and getting yourself confused, you can download a money tracking app, which are designed for ease of use and make it easier to see patterns in your spending behaviour.
There are free online money apps you can download to your phones such as Spending Tracker and Money Lover, both of which you can get on Android and IOS.
5. Create room for change
As you track your monthly expense, always have it in mind to find ways to create room for positive change in your spending.
When it comes to tracking your expenses, it can be very helpful to know the right things to spend money on and what to cut out of your expense.
This may seems daunting at first but once you start, you will quickly get the hang of it and saving will not seem like such a chore. After a few months, you will notice a change in the way you think about money and find yourself saving without thinking twice.