Tracking your money can be one of the most difficult things to do especially when you are out and about. But we have created a list of the top things you can do to trace what your money is spent on monthly and to ensure you are not living above your means.
Account statements
Bank statements have been around for decades providing a monthly financial document that provides a summary of your account’s activity. It breakdowns your incoming and outgoing payments, allowing you to keep track of your finances so that you can plan for future expenses.
Checking your statements frequently makes you more aware of your money habits, which makes managing your accounts more hassle free and allows you to recognise any unauthorised transactions. One of the easiest method of checking your bank statements is through your online banking, as it provides instant access wherever you are.
Expense tracking apps
Similar to online banking, expense tracking apps are a great way of keeping up to date with your expenses. Some of the best budgeting apps which allow you to connect your bank accounts are Plum, Moneyhub and Revolut. Using these apps while following the 50-30-20 budget rule reduces the complicated aspect of dividing your income each month. Allowing you to instead put 50% of your income towards your needs, 30% towards your wants and 20% towards your savings.
Other forms of expense tracking can include budget spreadsheets for those who prefer a more hands on approach and are particular about how their financial data is stored. Spreadsheets are a good way to analyse your money, as you are in charge of inputting all the necessary data. This gives you the opportunity to reflect as you categorise your expenses.
Categorising your expenses
Grouping your different expenses is key when trying to track where most of your money goes. It is helpful as it keeps your account organised making it easier to make bill payments on time, save for something significant such as a house or car, and prepare for emergencies that may come up. One of the first steps in categorising your expenses you can take is splitting your expenses into two categories.
Fixed expenses
Fixed expenses are payments that remain the same month to month. They can be categorised as payments that are necessary for your day-to-day life such as rent, bills, transportation, groceries etc. Being aware of your fixed expenses allows you to form good saving habits, as you have to budget for these transactions regularly.
Variable expenses
Variable expenses are payments that may or may not repeat month to month, however it is still important to track these payments so that you do not underestimate your budget. It is important to differentiate between needs and wants when it comes to variable expenses, so that money is not spent on unnecessarily things. In most cases, it is important to set aside money for variable expenses such as holidays, hobbies, entertainment etc.
It is important to highlight that how you track your monthly expenses is a personal choice. We all have bad spending habits that we may not be aware of until we track our expenses, and when we identify these habits we can make adjustments to do better.
