Having a budget is essential for everyone. It prevents people from spending money on trivial and/or wasteful things. Blind spending is common among the youth and young parents. Some people end up spending all the money in their bank and on their credit cards. Often, such people can't control the urge to buy things they come across that happens to strike their fancy.
Tips on How to Know Where Your Money is Going
Track Expenses
Most spendthrifts aren't able to plan their financial resources appropriately. At times, some even become bankrupt. To tame the spending habit, you need to track all your expenses. It helps you to determine whether you are living beyond your financial status and it makes you accountable for each decision you make.
Tracking expenses also helps you to know your total expenditure on your wants and needs. Generally, it is necessary for controlling one's finances. You can't start coming up with solutions before understanding the specific problem. Tracking your expenditure informs you of where you are overspending.
How to Track Your Expenses
• Receipts: Usually, you may forget some purchases that you made. Therefore, ensure to always ask for receipts. Alternatively, you can note them behind past revenues of a notebook. It helps you in calculating your total expenses within a particular period.
• Tracker: There is no particular way to track expenses. It's advisable to choose a tracking technique that suits you. You may use the standard paper and pencil method or an Excel, spreadsheet tracker. Besides, you can use various tracking applications.
• Track receipts: It's recommended to spare several days to review your receipts thoroughly. Tracking them frequently makes it less cumbersome. It helps you to transform your overspending lifestyle. You need to itemize it into various categories such as cleaning products, groceries, and electrical appliances. Ensure each group contains at least three items.
• Spending: After tracking your expenses, the next step is discovering your substantial financial mistakes. Review the costs after several days as you adjust your budget. It's necessary to perform an in-depth analysis on a monthly basis to assess whether there are any improvements.
Weaknesses
Often, after tracking down your spending for a while, you may realize that most of it constitutes credit card payments, loans, and discretionary income. Some people don't set aside money for their savings accounts.
If you make a random calculation, you may discover that you usually spend close to 5% of your monthly earnings on wants. You most probably deposit money on your credit card. It indicates that you are living a lifestyle that you can't sustain. Furthermore, you end up spending your entire salary on a monthly basis. If you don't track your expenses soon, you may be unable to initiate any long-term income-earning projects.
Spending is Addictive
Typically, when one notices that they have been feeding on junk food for long, and how it has adversely affected their health, they tend to be conscious about their diet. Similarly, when you start cutting down on unnecessary expense, you begin saving part of your income. You will be aware of your expenditure.
Once you know your general expenditure, and how it's hindering you from achieving your financial goals, you will be able to prioritize urgent needs and wants. You can also consult a reputable financial expert.
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David Brown is a geek at heart. He’s worked and consulted on some major online projects over the years. David has a passion for helping people learn the benefits of steam lining their business through computer technology, thereby saving them time and money. His expertise in the computer world has helped companies time and time again, manage their businesses, employees, and clientele more efficiently.
