If living within your means is your goal, then tracking your daily expenses should almost always be at the back of your mind. The first step is clearly understanding your net monthly income to the cent. This insight will help you understand where you are financially.
Expense tracking helps to inform you of the expenses that are consuming your money and also where you would like to divert the finances. Here are five steps you can start taking today to track your daily expenses:
Revisit Your Account Statements
Regularly checking your bank accounts, credit cards, and mobile banking apps balances to help you understand where your money is going. This will help you to also identify other charges that you may not be aware of or have been overlooking and may be costly over time. This reality check ensures that you prioritize your expenses based on necessity and absolute wants.
Use an Daily Expenses Tracking App
Budgeting or expense-tracking apps serve to ensure you record your expenditure on the go. With them, you can get a clear picture of the monthly spendable income and the potential amount you can save to attain your yearly financial goals. Your input and commitment in feeding these applications with expense data are required.
Additionally, some of these applications allow you to sync your bank transactions directly making them more convenient.
Create a Ledger
Yes. Expense-tracking can also be done without the apps. You will need a notebook to write down your expenses based on categories such as recurrent and one-time expenses. The recurrent expenses include utilities such as rent, food, and electricity. This breakdown is key as it indicates your approximate recurrent expenses and the disposable income left behind.
For the best results, you need to record the expenses each day if not throughout the day. Over time, this will change your spending habits to your desired course.
Find Expense Areas To Improve
Having known your recurrent expenses you should still use the disposable income sparingly and save as much as possible. This may mean sticking to a weekly spending limit. You need to give priority to must-haves before any other type of expense. For instance, when getting a new mobile phone, what’s cheaper: SIM only or contract?
Such questions may receive different answers from most people. You need to weigh every option and determine which best works for you.
To attain or exceed your saving targets you need to attach an end goal to your plan. These goals can be an asset purchase, like a rental property or land, among others. This will help keep you motivated throughout your financial journey. While you can still use your notebook, you will eventually save more with technology.
Leverage the expense-tracking apps to accurately monitor your spending habits. You need to understand that there are almost always cheaper yet effective substitutes for the items you want to purchase. Have a schedule to review and update expenses regularly. Remember to stick to or extend your savings goals whenever you add another stream of income.