Tracking your costs (also known as tracking your transactions) is simple just like a daily habit. And, like other key habits, such as flossing, it takes some effort and repetition to transition from attempting to remember to doing it naturally. But you’ll make it and your wallet will thank you.
Simply follow the instructions below:
- Step 1: Make a Budget
You won’t be able to track your costs unless you have one. What is a budget? It’s your monthly financial plan in which you assign each rupee that comes in during the month, whether it’s spending, saving, or giving.
And here’s how you go about creating one:
(i) Describe your earnings.
Make a list of every paycheck that will be received this month. (Don’t forget about any extras, such as that side hustle!) Sum it all together. This is the amount of money you have available to you this month!
Do you have an unstable income? Just take a look at what you’ve created in the last several months. As this month’s expected revenue, enter the smallest amount.
(ii) Make a list of your expenses.
It’s time to make a budget for everything you’ll be paying for this month. List your expenses in the below-mentioned order:
- Providing (10 per cent of your income)
- Financial savings
- Food, utilities, shelter/housing, and transportation
- Other necessities (insurance, debt, childcare, etc.)
- Added Value (entertainment, restaurants, etc.)
(iii) Subtract your outgoings from your ingoings.
This should be zero. That’s fantastic that you have money left over! If you have a negative number, reduce your anticipated totals or eliminate extras until you reach zero.
This is known as zero-based budgeting, and as previously said, it entails assigning a task to every single money you earn. That way, it will work just as hard as you do.
- Step 2: Track Your Earnings
When your regular paycheck arrives, enter it into the income section of your budget. Log in any money you generate from a side hustle or from selling anything!
If you have an irregular income, this step is critical. Remember, when you listed your income, you planned low. So, if your income turns out to be higher than expected, now is the time to make adjustments. You can add money to your current budget lines or cover some budgeted extras.
Even if you have a steady income, keep track of it! For starters, you can ensure that nothing is amiss with your pay.
- Step 3: If You Spend Money, Keep Track of It
Subtract the cost of filling up the petrol tank from your transportation budget line. When you pay your rent, deduct it from your housing line. When you buy tickets to your favourite singer’s concert, deduct the cost from your entertainment budget.
You get the idea. Track any money that leaves your wallet, bank account, cash envelope, coin purse, or old-fashioned piggy bank.
Make sure you’re simultaneously subtracting and tracking. Then you can see how much money is left over in each of your budget categories. This is where the magic happens—because this is where you keep track of your expenditures to avoid overspending!