If you want proper stability with money, you need to make savings and budget, and track your expenses. Track your expenses on a regular basis will provide a proper image of where your income is gone. You can easily find if your income goes on the wrong side and manage it easily. Now I’ll explain how to track your expenses and why it is important.
Steps of how to track your expenses:
Is it difficult to understand how to track your expenses? If you do it like other habits, you can easily manage your expenses and make savings. You can easily understand how to track your expenses after reading this article.
Step #01: make your budget:
A budget is a statement in which you make a sheet of your monthly expenditures. Without a budget, you cannot track your expenses. Budgeting and tracking expenses are related to each other. Sometimes, you listen that your budget limiting you. But this is wrong. The truth is that you limit your budget, your budget doesn’t limit you. Now we see about the setting of a budget and how you track your expenses with the help of a budget.
Checklist your income:
See the list of how much income you get in this week? Sum up all these check incomes. You will get the total income for the month in which you are budgeting. Also, check the source of passive income if you have one.
List of your expenses:
After understanding how to track your expenses and get the total amount for the whole week, make a plan for all the expenses. Make a list of the following things:
- How much do you save in a month?
- How much do you need for rent, food, utilities, etc?
- How much do you give other people as a support purpose
- Other necessities
- Other extras for entertainment, restaurants, etc.
Cut down your expenses from your income:
After making the list of expenses and total income. Subtract your budget/ expenses from the total income. If you save money after subtracting, this will prove good in the budget for significant expenses. But if you get zero at the end it is called zero-based budgeting.
Also, read this Why Are We Making Savings And Budgeting?
Step #02: if you make an income, check it:
When you receive regular paychecks, add them to your income. When you plan for your income, you keep it low. But sometimes, you get extra money by selling something, get a bonus from the company, etc. This is an irregular source of income. Now is the time for the adjustment of your irregular income. Even if you make regular income the same as in previous months also track it. Because this is important in how to track your expenses?
Step #03: if you consume your money track it:
You should track every minor expense throughout the month. If you to a Gas filling shop to fill up your cylinder or gs tank, subtract the amount which is used in the filling of the cylinder from your budget. If you pay rent of the house cut down the amount of expense from the budget. if you buy groceries for your home, subtract the amount from your budget. As like this cut down the expense from your budget as you consume money. As you are consuming money, ensure that you subtract money from the budget also.
Step #04: make a regular pattern for tracking:
The first question that comes to mind is how to track your expenses. You should track your expenses regularly. This might be at the end of the day, on weekly basis, and just after your purchase. If you are married then you have the best option for accountability, both of you track your expenses regularly. You can track your expenses easily by doing this.
Why should you need to track your expenses?
Till now we are just talking about how to track your expenses. But now we see it deeply. When you start budgeting at the beginning of the month, it impacts a good impression. But it is risky. Because you don’t know where actually goes. Now we see the different ways how to track your expenses below:
1: Paper and Pencil:
We cannot the importance of paper and pencil used in tracking expenses. Now everything is computerized. But before this, all the tracking process was on paper with the help of a pencil. This is easy because no technology is used in this. You just need some paper and a pencil for tracking all your expenses.
2: Envelope system:
In this, we used an envelope for our expenses. At the beginning of the month, you put the amount in this envelope with the expense name like groceries expenses, utility expenses, credit card bills, etc.
3: Budget spreadsheet:
You can easily manage all of your expenses on a computer sheet. Because everything is digital nowadays. You just put all the expenses on a sheet and set the formulas it handle it automatically and subtract your expenses from the budget.
4: Budgeting Apps:
Budgeting apps are the best options for budgeting and tracking expenses. You just install the app from Play Store and start budgeting on it. Manage all your tracking just with one click. You see budgeting apps are best for budgeting. Every single dollar is important in budgeting and tracking expenses.
Benefits of tracking the expenses:
When you really know how to track your expenses, you will get advantages from it. . Some of them are given below:
- It helps you to run according to the budget plan.
- Easily track your extra spending.
- You can find your financial goals.
- It makes easy with the help of apps and technology.
After reading this article you know how to track your expenses by using different strategies and technologies. You can find the best way of tracking expenses. You also know the importance of budgeting and tracking expenses. Make a plan and start budgeting from today. When you make a plan, execute it and see how it is beneficial for you. You can easily manage your finances and make savings for further expenditures. Budgeting plays an important role in your daily life.