To change your life for the better, you first need to change your attitude toward certain things. And the main place among them is occupied by expenses. First, it’s necessary to know them, what types they are and how to take them into account.
Types of Expenses for Personal Finances
There are two big types of expenses: unmanageable and manageable.
The first group includes utility bills, loans, rent, internet, and transportation costs. This can include spending on birthdays and important holidays, and buying gifts. The best option would be to allocate monthly holiday funds from the family budget. This way, family members will always have money for gifts, and these expenditures will not be unexpected.
Uncontrollable spending is spending on which one cannot save anything. For example, if a person takes it upon himself to buy less gasoline, at one point he won’t be able to use his car to drive to work. Such expenditures are necessarily budgeted in the monthly budget.
The situation is different with manageable expenses. They can be reduced in any way possible. Such expenditures should be broken down into certain categories. For example, if $500 was allocated to buying groceries, and $50 was spent on unnecessary goods (e.g., sweets), this item can be reduced the next month.
There is also quite a bit of money spent on a category such as entertainment. These expenses can be managed. That doesn’t mean you have to give up playing 22 Bet or Netflix subscriptions. Or if you go to the movies, you can do without buying popcorn. Or go to an earlier show, since it will cost less. The same goes for sports. Consider whether it is necessary to spend money on an expensive gym if you can work out at home.
Method One. Notebook
That’s the most common way to keep track of the family budget. You can use an ordinary notepad or notebook to record your spending and income. This method attracts by its simplicity – you don’t need to study complex programs and understand the applications. You can use the notepad at any time and in any place. The main disadvantage is that all entries are made manually, which takes a long time. There are also problems with viewing statistics – it will be difficult to analyze the data for a certain period.
The basis of the method is a record of income and expenses, as well as their analysis. To start, you should divide the notebook into three parts. The first should record income, the second – expenses, and the third – the funds that are leftover.
The “expenses” part is also recommended to be divided into several parts. For example, there may be columns such as “Food”, “Clothing”, “Apartment”, etc. You can also highlight which of these expenses are manageable and which are unmanageable. In this way, you can see which category the most money is spent on and further optimize your expenses.
The information that is recorded in the “Balance” column should fully coincide with the amount of money that remains available.
Method Two. Excel
People who have basic computer skills can use the MS Excel editor for this purpose. The program has all the functions necessary for this, and the necessary parameters can be configured independently. It’s also convenient because all the calculations will be done automatically, the tables of expenses and income will be displayed in different categories. The user will be able to view statistical data for several months and create graphs and charts.
MS Excel can also use a system with columns “Income”, “Expenses” and “Balance” or record planned and actual results. The capabilities of this program far exceed those of a simple notepad and pen, so it is recommended that you familiarize yourself with them in more detail.
In Excel, you can easily make calculations of the necessary data by using the “Formulas” function. The program allows you to draw the result of calculations in the form of charts and graphs.
Method Three. Programs and Apps
Keeping track of your finances doesn’t have to take up a lot of your free time. This is true only if a person writes all the data in a notebook and makes calculations manually. But keeping records with modern technology doesn’t require as much time and effort. You can also use apps and programs for this. You need to have a computer or a smartphone for this. Use these programs for financial accounting purposes.
This program has a large number of functions. Not only can you keep track of your finances, but you can also set specific goals. The program allows you to create and view your financial performance. You can use it on your smartphone or computer. The only disadvantage is that the free program only works in online mode. Also, it cannot be synchronized with your calendar and other apps.
With Money Lover, you can keep track of spending, view statistics, plan major purchases, track payments. It has the function of synchronizing information from other devices. The program has an extended list of categories, which allows you to clearly structure your spending. You can use the paid or free version. The paid version has no ads, you can export data to other formats, and there are no limits on the number of goals and invoices.
An increasingly popular service that has a simple interface and advanced functionality. It’s possible to do accounting for the whole family at once. The app is automatically updated.