Personal Finance – How to Track Your Spendings
If you suspect you are overspending, you need to save. But saving itself is a habit that needs to be cultivated over time. What now? Fortunately, you could track your spending. Analyzing on what you spend is the best way to avoid overspending. How do you track your expenses? Well, by writing down on a piece of journal with a pen of course!
If this is your first time, it can be awkward. This is especially true if you are already an adult. Good habits of saving should be learned since childhood already. Nevertheless, it is never too late.
To get the dice rolling, get your hands on the following:
– Your recent pay slips
– Tax documents (especially the returns)
– Banking bills, payment records (offline and online)
– Registers for chequebook (this includes cancelled cheques) and debit card transaction history
– Credit card bills
Compile the documents necessary to keep track of 12 months period of spending.
But if your spending patterns are consistent throughout, you can reduce it to a 6 months time frame. Whenever you make a huge spending, be sure to include that month when the expenses occurred.
Cash payments are hard to track
This is because they do not have a paper trail. How do you solve this? Easy. Record everything you buy with cash during a week time period. Sometimes, you might get lazy and estimate the amount. This is also fine to do.
Label your expenditures into useful categories
Classify them into sections like taxes, house, food, transportation, lifestyle, debt repayments, leisure, personal care, health care, insurance and so on.