Tracking your expenses every month is an important thing you should do as it will help you know how you spend your money or where your money goes every month. This is undoubtedly one of the major ways you can manage your money.
Now let’s talk about the 5 steps to track your expenses every month:
1. Know Your Income
The first step to accurately tracking your expenses is to know the average amount you are currently making every month. You can do this by writing down all your sources of income and the amount of money you have made from each one in the last 3 months and taking the average.
If you can’t remember, you can take a look at your transactions on your bank app and try to see how much was paid into your accounts in the last 3 months.
2. Group Your Expenses
The next thing you need to do is to group your expenses. You can broadly group them into fixed expenses or variable expenses. Your fixed expenses are those that take a fixed amount of money from you every month like rent, utilities, etc.
For variable expenses, the amount you pay in any given month could be different from previous payments or future payments. Examples are food, clothing, vacation, gifts, etc.
3. Use A Budgeting App
You can use a budgeting app like Kuda Bank to track your expenses. You can also use a budget tracker like the one on google sheets. Whether you are using an app or a template, you are good to go.
Some budgeting apps are designed to help you manage your money by letting you allocate a specific amount of money into different expenses depending on your income. These apps will only help you if you’re willing to get serious with tracking your expenses and sticking to your budget.
4. Use A Separate Bank Account
If you are the kind of person who is lazy about keeping a budget but still wants to track your expenses every month, then I will advise you to use a separate bank account for your expenses. By this, you have just one account for paying all your bills and other expenses. This way, you will know that all your expenses are in one bank account and you can easily track them from there.
5. Make The Right Changes
By the time you start tracking your expenses, you will realize that some of your expenses are not necessary. You will even see that you are wasting money on some things. At this point, you will need to start making changes to how you spend your money and the things you spend your money on.
Tracking your expenses is really important in getting your finances right. It will really help you know those expenses that are unnecessary and the ones you need to reduce. And it will massively help you manage your money the right way.
If you need help on how to monitor, control, and manage your finances, check out our tips on how to create a budget for your money.