Budgeting is arguably not the most fun task, but if done regularly, it’s something that can help you achieve and maintain financial stability, which makes you more able to do fun things like go to concerts, take road trips and eat at restaurants rather cooking things at home. Fortunately, there are several easy and effective ways to keep tabs on your money without cramping your life.
Keep Ongoing Notes About What You Buy and Where
Have you ever experienced the all-too-common scenario of being under the impression you have more than usual to spend during a given month and then suddenly wondering where all the money went? To receive the often-elusive answer to that question, start participating in a low-key method of tracking your spending in a journal or on a notepad.
Find something small enough to take with you throughout the day. Otherwise, leave the writing materials on your bedside table and add the day’s expenses before sleeping. It’s also ideal to keep a small folder near your notes, or even attached to them if you use a notebook that has pockets inside. Put all the receipts there so you can easily refer to them before making a return or when verifying you were charged the right amount for something you bought.
Besides helping you understand precisely where all your money goes, this method also works well for giving you a realistic snapshot for how much you spend in a typical month on certain categories of living expenses. That knowledge is helpful to have before trying the other possibilities outlined below.
Use a Spending Tracker App
There are apps for everything these days, so you shouldn’t be surprised to read about numerous handy helpers that highlight your spending trends. The specifics vary depending on which one you choose, but apps generally link to your bank account or credit card and automatically tally your expenditures.
Some, like Mint, are particularly intelligent and examine each entry on an electronic statement and try to determine the kinds of things you bought. For example, if your bank statement shows you spent $12 at Gino’s Deli, the app would probably recognize there’s a good chance you bought food during that transaction and would update your spending records accordingly by adding that amount to the food category.
In addition to adding up how much you spend, these apps usually allow you to set spending limits and receive alerts when you nearly reach those caps. You might know you usually spend between $150-200 per month on groceries but decide to set a $225 spending limit just in case you want to splurge a bit. Once your spending total for groceries gets within a certain amount of the specified limit, the app can send you a text or email notification.
Try the Envelope Method
Like some people, you may prefer to buy things with cash rather than using a debit or credit card, especially if you have struggled with debt in the past and don’t want to resume old habits. In that case, the envelope method could help you track your money while preventing blowing your budget.
Get started by making envelopes that represent all your major spending categories. You can simply write the name of the category on the front, along with an amount. Then, put the money directly inside the envelope. Once you’ve depleted a particular envelope of its allotment, you shouldn’t theoretically spend any more on products from that category for the rest of the month. To plan for unexpected situations, it’s a good idea to make an envelope for miscellaneous needs. That one can also double as the envelope you dip into when covering non-essential expenses like a trip to the cinema or a new dress that you don’t need but couldn’t pass up.
Get Acquainted With Spreadsheets
Spreadsheets can also help you become more aware of your spending patterns. Even better, you can access a spreadsheet program and other budgeting tools for free courtesy of Google, and if you use the Microsoft Office suite, Excel is one of the foundational elements of that package.
Although spreadsheets may seem a bit cumbersome to work with at first, you might find they help you work towards your financial goals. That is especially true since most spreadsheet apps or software programs have built-in safeguards to prevent calculation errors as long as you enter the data correctly.
Now that you have learned about these practical and simple ways to monitor spending, hopefully setting and sticking to a budget will become necessities within your reach. You might be amazed at the increased financial freedom you enjoy as a result of your efforts, especially over time.