Everyone knows that you need to have a budget to keep track of your finances, but do you know why it’s so important? Let’s break down exactly how to track your spending and master your budget! When it comes to handling your finances, we know that what can be measured can be managed. So many […]
Everyone knows that you need to have a budget to keep track of your finances, but do you know why it’s so important?
When it comes to handling your finances, we know that what can be measured can be managed. So many people write out their expenses and their income and everything looks good on paper! You feel like you know what you’re making and spending but somewhere there’s a disconnect. At the end of the month things don’t add up and maybe you go into debt because of it. I’ve been there!
Once I sat down and tracked my spending, I saw exactly what was going on. We’re probably spending more than we think we’re spending, but the question is where are we spending it, on what things, and how do you make cuts and changes to your life when you don’t fully understand where your money is going.
When I first started, I printed out 3 months of bank statements and highlighted all of my spendings to get a good look at what was going on. Now, you can do it electronically through apps like Mint that make it a lot easier!
I think this is an important thing to do every once in a while to see what has changed in your life. Seeing how much you’re spending on things like food, going out for drinks, and shopping can be eye-opening.
I think 30 days is a good period of time to assess where your money is going. You could also do three months’ worth of spending and divide those numbers by 3 to get an average for how much you spent. I suggest reviewing your spending every week, as doing it once a month can get a little overwhelming.
Based on these feelings you can then make your changes. If you look at one category and it feels like something that added value to your life, then maybe going over budget on that is okay! If it didn’t, then you can choose to take that money and allocate it towards savings, bills, or whatever your goals are next time.
Be patient with yourself – changing your spending habits takes time. Raising awareness of where your money is going is the first step in changing those habits and putting your money where it adds value to your life. We only have so much money and so much time, so we have to find ways that these can bring us joy rather than stress since they’re both so limited.
Once you’ve found where you want to make changes, make your budget based on this. Reallocate money where you want it to go and take note of where you don’t want it to go. Baby steps and making realistic goals for yourself are key here. Then implement that budget going forward as well as tracking your spending, since you’ll most likely have to reassess at the end of the month and make some tweaks to your plans.
Remember to be patient with yourself and good luck on your journey to financial freedom!