How to identify your spending habits

Last time, I shared my tricks on creating a budget with you. Are you using this weekend to set up your own budget? Fantastic! It’s a great first step to get control over your expenses and to gain financial peace of mind. In this blog, I’ll show you how to track your expenses and how to identify your spending habits.

1. Request receipts for all purchases. You may think you’ll remember. Our brain is not configured to remember such details and it’s better to either have receipts. If they’re not available, write them on a piece of paper and keep it with the other receipts.
2. Use only one system to track all your expenses. This can be paper based, an excel spreadsheet or an app. These days, there are tracking options to fit everybody’s need. Decide which one works for you. By using only one system to track your expenses, you’re gaining a clear view of the entire outflow of your money.
3. Write down all expenses at the end of each day. Tracking your expenses daily may only take a few minutes and makes it easier than doing it on a monthly basis. If daily does not fit into your schedule, set some time aside one evening or on the weekend.
4. Keep those receipts paid for with your credit or debit card or for tax purposes. When you’ll receive the credit card or bank statement, check the amounts are correctly deducted and shred the receipts. If you need to file taxes, keep those receipts which will be needed for your tax return. If you have questions about a receipt, contact your tax adviser.
5. Total up your expenses. At the end of the week and then again at the end of the month, calculate your overall expenses in each budget category and for the entire budget. Have you stayed within your overall budget? Have you stayed within each category within your budget? Yes? Congratulations!
6. Make adjustments, if needed. Especially, if you have overspent on parts or all your budget, review whether you’ve anticipated the appropriate amount for your expenses in each category of your budget. With regular expenses like your utility bills, have your variable expenses like your mobile phone bill or DEWA/water bill been exposed to some variances? Anyone who has a home with a garden or even a pool knows that the water bill will go up in the summer time.
7. Stay within your means. While you may need to make some adjustments to your budgeted expenses for some categories, keep in mind that you can only spend up as much as you earn. You’ll need to learn to stay within your means, if you don’t want to occur debt!
8. Review your spending habits. Did anything come as a surprise, like the amount of money you spend on your daily caffeine fix or for take away meals? Do you make big purchases at an impulse? Tracking your expenses allows you to see patterns as well as irregularities in your spending behaviour. Did you have any surprises?

I clear my pursue at the end of the day and enter my expenses in an excel spreadsheet. As I go through the month, I keep an eye on my overall spent. In addition, I check that those budget categories, which are nearing their total budget amount, will be kept in balance to not overspent. This is what’s working for me.

What’s working for you? What progress have you made with setting up your own budget and tracking your expenses? What tips do you have for other readers who are starting to track their expenses now? Please let a comment below!

Until next time,

Agni