Have you ever wondered where exactly your money goes?
Tracking your expenses is the first step to build your budget. Knowing your spending habits will allow you to judge if your money goes where you really want to. What is more, this will be your clash with reality. The numbers exactly shows you what you REALLY do with your money, not what you wish to.
The rule is simple – or you control your money or money controls you. It’s your choice.
How to track your expenses?
At the beginning I was simply writing down my expenses in a notebook. It was a fail. I didn’t remember the right amount spent or I was just not consistent in my tracking. Then I prepared a simple spreadsheet and kept all the receipt. It worked pretty well, but it was hard to catch all the small expenses – a bus ticket, snack/coffee bought in a local shop or other small payments I would do by cash.
I finally found a solution, once I change my phone to a smartphone (yes, I started my first expense tracker ages ago). I tried multiple apps, but to be honest the simplest solutions are the best. And I came across an app called My Wallet (I found a similar one for iPhones here but unfortunately it’s not free). Being able to put all my expenses any time I want, was the key to being persistent.
Remember to track all your expenses, even the smallest ones. Also write down your income, both from your main job, but also from your passive income sources or additional work you do. On this basis you will be able to produce a realistic budget (in the next post I will show you how to prepare a great budget step by step).
Keep all the expenses in different categories: bills, rent, groceries, snacks and eating out, clothes, cosmetics, etc. This way you will have a realistic view on how you spend your money.
To give you an example I will show you all the categories I have on my app:
I don’t need to track my expenses each month anymore, but to check if I’m still on the track I like to make an expense track once a while and I always go back to my favourite app.
Anna, but what’s the benefits of tracking my expenses?
You may think tracking your expenses it’s time consuming and will require you to be systematic. And your right. But the benefits of seeing where your money goes are worth it!
First, quite often, you will realise that you lied to yourself about how you prioritise your expenses. You may be surprised that instead of spending money on healthy food you regularly order a pizza twice a week (obviously watching Game of Thrones goes so well with a peperoni!). I’ve noticed that once I’ve done my first expense track I was surprised how much I would spend on cosmetics (and how unhappy I was about the state of my skin) while moaning that I don’t have money for one of my biggest passions – travel. I realised that i was spending money on things which had no value to me (magazines, expensive cosmetics and clothes) instead on focusing on things which were on top of my list of priorities.
What is more you may realise how much money goes on little things which are generally not expensive (snack or coffee) but if you buy them each day the amount will grow big.
And then starts the fun – you will see where actually you may reduce your expenses and were you would like to spend more. Maybe instead of a movie show each week with a dinner out you could stay at home and save up for your dream holidays on Canary Islands or for your future business?
One is sure – being realistic about how you spend your money is the first step to take control over it.
Wishing you all a fantastic year 2018!