Do you know where your salary goes each month? You might say, “yes”. Your money goes to food, rent, transportation, water, electricity, and so forth. But try to remember what else you bought in the last 30 days. Did you buy a new pair of shoes? Did you join your co-workers for drinks one Friday night or go to the movies?
Did you even remember to set aside money for your savings?
These are questions you should be able to answer in a snap. They also prove why expense tracking is so important. Expense tracking allows you to do the following things:
1. See how much you’re spending on necessities and non-necessities.
2. Adjust which expenses you need to cut and which ones need more cash flow.
3. Allocate your money to things that mean the most to you ( for your family, for investments.)
4. Find out where you can minimize your spending so can allocate more for your savings.
With these goals in mind, here are three easy ways on how to track your expenses.
1. Use a Money Tracking App
Install an expense tracker or budget management app on your phone. The beauty of this is you can quickly pull out your phone and log your expense every time you buy or pay for something. An app is a great way to keep track of how much you spend for various expenses, such as necessities (ex: groceries, rent), leisure (ex: movies, vacation), and savings.
2. Create an Excel Sheet
An alternative to a phone app is creating an Excel sheet for your monthly budget and expenses. You can format it any way you like. For instance, you write your budget for the month at the top of the sheet so you can look at it for reference. Then, create a calendar-like table where you can input your expenses for the day.
3. Use the Envelope Budgeting System
If you feel that logging your money into your phone or computer is too much of an effort, consider using the envelope budgeting technique. It is the practice of creating categories in your monthly budget and assigning a specific amount of money for each of them. Prepare an envelope for each category and fill them with cash according to your budget allocation. This technique can help you stick to your budget because you’ll see how much you have left for every category. At the very least, you can be sure you’re not overspending on one thing (for example, food) and forgetting about another essential expense (your rent).
When you know where your money goes, you can be more effective at managing your monthly salary. Use any of these three techniques so you can always be in control of your finances.