Saving money is always a great idea in theory. Unfortunately, budgeting has a bad reputation because people think it means no more spending money on anything fun ever again. But once you learn how to create financial goals and track your finances, you’ll find that isn’t always correct. Besides, having extra money in your pockets is always a good thing.
Whatever your dreams may be, having long-term financial goals for your future can help you achieve them. With that in mind, here are some simple go-to steps on how to track monthly expenses and save money so you can reach your financial success quicker.
What are you saving for? Without set financial goals, it’s incredibly difficult for most people to save money. After all, money is only a tool. You need to know what you plan to build with it. Once you know what your financial goals are, you should then commit and put them into writing.
When you write down your goals, something special often happens. Writing them down somehow gives them life, making them more significant in your mind, which ultimately means you’re much more likely to achieve them. Once you write them down, keeping your goals in places where you can see them is a good way to ensure you are always focused on them. Put them on your fridge, tape them to your monitor, or stick them to your bathroom mirror.
Another vital part of setting financial goals for yourself is to make them as specific as possible. This means that both your short term and long-term goals need to be firm and measurable with realistic and achievable end dates which will serve as deadlines. For example, a short-term goal might be something financial you are aiming to achieve in the next few months, such as a new laptop or phone. A more expensive long-term goal might be set for many years away, like to save for retirement.
To successfully achieve your financial goals, you’ll need to understand precisely what is happening with your money now. Most will probably already know what their regular income and expenses are, so determining the total revenue coming from work and investments should be relatively easy. But fewer people will have an accurate insight when it comes to their irregular expenditures which change from day to day.
The strength of any budget will ultimately be determined by its accuracy. So, carefully track your cash flow coming in and going out by collecting every document with relevant information on your incoming finances. This can include anything such as pay slips and receipts, to a bank account, credit cards, and investment statements. You should include all your financial information for at least the last three months with everywhere you typically spend money.
Some of your expenses will be fixed and regular, like rent, loan repayments, phone bills, and insurance premiums. Others, like groceries, entertainment, credit cards, internet, and streaming services might all be different each week or month. For these irregular but expected expenses, you need to collect everything from the last 12 months and make estimates for each.
The best method for how to track finances is by categorising your expenses. Your categories can be as specific or as general as you need, as long as you know how to track monthly expenses accurately. If you have an American Express® Credit Card, you may be able to use the Plan It™ Instalments feature, which can help you learn how to control your spending. It allows you to pay off your credit card balance in equal monthly instalments.1
Ensuring your personal finance always remain current and accurate may seem like a daunting task, but commitment and diligence are both necessary elements of a financial budget that works. Thankfully, there are a number of special expense tracker tools and budget apps available which have been created specifically to help you monitor your expenses. Besides, you use your smartphone for everything else anyway, so why not also use it to help you track your budget and save money as well?
Some budgeting apps go even further, providing additional services that help you save more money by reducing your bills or even offering investment advice. With the increased clarity on your financials, you’ll find it much easier to work toward and achieve increasingly larger goals, from paying off loan debts, to travelling overseas, as well as putting savings into your retirement account or superannuation, or your own home.
WITH THE INCREASED CLARITY ON YOUR FINANCIALS, YOU’LL FIND IT MUCH EASIER TO WORK TOWARDS YOUR GOALS.
Once you’ve collected all relevant financial information, you can confidently calculate your average monthly totals. Write down the totals for each category on a piece of paper, enter them into a spreadsheet, or use a budgeting app, whatever is easier for you. Since these numbers shouldn’t change much each month, you’ll be able to use them as a foundation to create your monthly budget.
To work out what you’ll be able to save, simply subtract your expenses total from your monthly income total. The amount of money left over is what you can choose to spend or to save. If the number is negative, you’ll need to make some immediate changes to your current earning, spending, and saving habits.
Once your budget has been set up, you’ll need to continue monitoring your spending for each category at the end of the month. You should only be making small adjustments whenever there are changes to your income or spending habits.
When you’re learning how to reach your financial goals, you’re always playing the long game. That’s why they’re called goals. There is no one-size-fits-all approach when it comes to budgeting. As long as you keep on track of your cash flow, you’ll be able to reach your financial goals.