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Planning out your spending help you keep your life under control. Simply because when you have a plan ready, you can clearly highlight how much money you have coming into your pockets, and how much you spending on and where can you come up with extra cash by making trade-offs. Needless to say, it will help you in meeting larger financial goals.
If you are having troubles in tracking your spending, it’s time to plan it. Here’s how to go about it:
1. Know the Details
Begin tracking both your income and expenditure in detail. Having no idea as to where your money’s really going or about to go, or turning a blind idea to how much money is coming in is not the best of the practices you should live with.
Having a sight on the payments that are about to be incurred in near future will definitely be of aid in both short and long term. What this implies is that you need to go ahead and collect together your bank and credit card statements accompanied by keeping track of any additional cash payments.
If you are a business owner, make sure not to forget all expenses, rather than just broad-brush categories such as office stationery and other important supply elements. On the personal front, car expenses would include all maintenance expenses, gas, insurance, and tax outlays. If just in case you have irregular income and outgoings, the average of each of these amounts should do the deal. Try your hands on Microsoft Excel or Google Sheets to tabulate and track your expenses and incomes. Planning and tracking also becomes easy with the use of some web apps.
2. Account for Changes in future
While it is definitely worth a while to try and predict the future, it’s even more important to keep in mind that predictions tend to become less accurate as move further ahead in time. It is simply because of this reason that you have to leave some scope to revise your budget regularly to keep it relevant and accurate.
Keep a reserve for any emergency expenditure like health care expenses for loved ones. So this process will need you to go through the above steps each time to make sure all the figures are still accurate and making adjustments and corrections as soon as you come across any discrepancy.
There’s one last thing you need to keep in mind here. A budget is a commitment and you must try to stick to it closely to secure your finances.
3. Be Disciplined with your budget plans
Discipline is the mother of control. Therefore, you need to be disciplined in money matters to be in control and ensure sure your finances are in good shape. Directly or indirectly, that leads to an end of impulse purchases, however lucrative they seem. If the current spending was not planned into your budget and it isn’t strictly necessary, it should be put off until the next budget review.
There’s one hack you could try here as well. To make this discipline more acceptable, try setting yourself rewards, such as a holiday trip or a modest sum to invest on yourself and the likewise introducing a penalty if there is a deviance in your discipline.
4. Extrapolate your high and low points
Pen down a quick review of where you went right or wrong with respect to your budget goals and plans. Being frank here will help pinpoint your weaknesses or liabilities for that matter. Did I end up spending more than usual on plane tickets because you waited too long to buy them; or did I just indulge into over expensive gifts for loved ones? If these questions resonate with you it is time to think on your strengths and weaknesses, your liabilities and assets. Highlight the good decisions you made whether it was comparing prices before buying a new car or getting into more homemade meals.
For success on the personal or professional front, the key lies in creating an accurate budget. There is no hard and fast rule to be an extreme penny-pincher. All you need to do is know the details of your money, keep an account of the changes you might come across in future, be disciplined with your budget plans and extrapolate your highs and lows. Happy planned spending!