Growing up in the middle class, I have always acknowledged the value of money and the skills of proper financing. No matter how much you earn, budgeting and tracking expenses, and saving in a suitable mode is a must.
If you’ve struggled with tracking your expenses, you’re in good hands now. It’s scientifically proven that it takes 21 days to create a habit. Hence I bring forward 3 easy steps for you to follow for 21 days and get hold of your spending patterns.
Why should you track your expenses?
First, let’s understand why tracking expenses is so important. If you are someone who’s left broke at the end of the month. Or someone who forgets about necessary bills and regrets it, then you already know why expense tracking is important.
Even if you’re organized already, there’s no harm in learning new tricks to get hold of your money.
Tracking your expenses will help you –
- pay your necessary bills upfront
- maintain a mentally free life
- be more organized
- make you a wise spender
3 easy steps to track expenses
Here is a sure-shot 3 step process to track your expenses. Follow along –
1. Create a budget
No matter how boring it sounds, budgeting is actually a very healthy habit to inculcate. People who want to be mentally free and not look up their bank balance every time they want to spend on something, do budget efficiently.
The simplest rule for budgeting: 50-30-20
Divide your monthly after-tax income into three categories:
50% for needs
30% for wants
20% for savings
(If you are more saving conscious, you can make it 50-20-30)
By regularly maintaining a balance between these three areas you can put your money to work effectively.
Pro Tip – Put your 20% savings at the beginning of the month, or whenever you receive your salary. That way there will be no excuse to skip savings at all.
2. Use an expense tracker app
When you’re done with budgeting, start paying your monthly expenses and start tracking them in any expense tracker app that you find useful.
An expense tracker app will help you understand where exactly your money goes. By the end of the month, if you’ve spent more on food, the app will act as a reminder and make you a more conscious spender.
You can use free apps like – Google Sheets, Mint, Goodbudget, Personal Capital, YNAB (you need a budget) and more.
3. Check your statement weekly
Once you are done with setting up a spending limit by creating a budget and setting up a tracking system, the only thing left to do is regular check-ins.
Revisiting your expense tracking app and bank statement will give you a clear view of where you stand with your money and make you a wise & woke spender.
Tracking your expenses will ensure you have enough funds throughout the month and good savings for your future too. Other than the three steps above, you can also categorize your expenses well, improvise your budget timely and set up SMS notifications from your bank to get your daily/weekly reminders.
Always remember – “When money realizes that it is in good hands, it wants to stay and multiply in those hands”