The ‘buy now, pay later’ mindset has left millions of people to fight the debt battle. All you have to do is whip out your credit card every time you buy something. The result is excessive debt that results in a financial burden and sleepless nights. No matter how bad the situation seems to be, there are ways to have control of your finances. The best way is to track your spending, Discover exactly where your money goes, rather than wondering where it went.
Tips on how to keep an eye on where your money goes
Make a budget
The first step is to make a realistic budget plan to know about your inflow and outflow. List all your expenses, including bills, monthly payments, fees and allowances. Make a budget plan by calculating your total income and total expenses.
Stick to your budget
There are multiple ways to track your expenses and stick to your budget amount. Handwritten- One of the simplest ways is to write everything down on paper. Get into the habit of jotting down each purchase in a notebook when you make it. You can also make an excel spreadsheet to get a better idea of inflow and outflow of cash.
For those who are tech-savvy, automated budgeting software offers an easy online way to organize and categorize their spendings. Website apps such as Mint and Quicken can be directly linked to your checking and savings accounts. They offer a passive mode of creating a budget and keeping a tab on spendings.
Some of these software programs are available in the form of apps, and can be downloaded on your phone. So, you can monitor everything on the go.
Pay in cash
One harder way to control spending is the envelope system where you pay everything in cash. It is difficult to let go of that hard earned cash then it is to swipe a debit card. Categorize envelopes and put the estimated amount in it and spend accordingly.
Cut down discretionary expenses
Last but not the least; making few lifestyle changes is an effective way to cut down on unnecessary expenses. Differentiate between needs and wants. Next time you wish to buy something, ask yourself if you need it. Reduce your discretionary spendings and redirect your expenses towards your credit card balances.
Tracking your expenses is one of the easiest and effective ways to manage one’s personal finances. The above tips to track your spendings will help you keep a tab on your finances so that you can reduce stress and sleep better.