Money management is a challenge for a great number of people. It’s no secret that you need to spend less than you bring in on a monthly basis, but truly gaining control of your financial well-being means having a clear view as to where each and every hard-earned dollar is going. Most people will say they have a good idea of their spending habits, only to be completely surprised when they actually tally up their expenditures. Begin tracking your spending, and you might find there are some easy ways to trim the budget and improve your bottom line.
- Record every expense. Whether it’s a $2 muffin or a $100 night out, every dollar counts. Make sure to include everything you spend money on over the course of the month. This includes your credit card bills and mortgage, but it also includes taxis, transit, magazines, clothing, gifts, groceries, alcohol, sports and entertainment. Leaving out your daily muffin at the office may not seem like a lot, but over the course of a week that adds up to $10 – and $40 by the end of the month. Not an insignificant amount of money after all!
- Define categories and track where you are overspending. Highlighting where your money goes is much more simple when you assign a label to your expense. Track categories such as housing and necessary bills such as gas and electricity separately from other household bills such as internet and cable. That’s because while these bills are tied to your home, they really fall under the entertainment category. Some examples of common categories include:
- Housing expenses
- Loans/Credit Cards
- Car/Transit expenses
- Entertainment (this includes restaurants and coffee breaks)
- Physical Fitness (including sports or gym memberships)
- Clothing and footwear
- Personal Care (hair appointments, nail salons)
Breaking down your spending habits into smaller chunks helps to easily identify if your monthly personal care expenses are exceeding your grocery bill or if your Uber driver is actually taking home a large chunk of your income.
- Use a consistent tracking method. Whether you are a pen and paper kind of person, prefer working with spreadsheets, or have discovered the many simple to use financial tracking apps available on the internet, make sure to record your expenses on a consistent basis – otherwise items will be forgotten or overlooked, and you won’t have an accurate picture of your spending.
- Get good advice. Tracking your money is a great way to keep on top of your budget and find ways to trim unnecessary expenses, however, if you find that you are consistently in the red, no matter how hard you try, it’s time to get advice from a professional. D. Thode & Associates specializes in helping individuals make sense of their financial future by offering professional counselling and sound solutions that work.