Have you tried tracking down your expenses on a daily basis?
Well, I “tried” and repeatedly failed in doing this task because it is literally tedious. I often feel lazy to do it. I’ve tried it countless of times already, my wallet bloating with receipts that I keep which I fail to record most of the time.
Beginning March of this year when I enrolled myself in the Registered Financial Planner (RFP) Program, I committed to religiously track my expenses with the following objectives in mind:
1. To know how much I am spending.
2. To know what I spend on.
The first step to CHANGE is AWARENESS.
And the only way to be aware is to JUST DO IT!
Before I took the challenge of tracking my expense, I made my Personal Financial Statement Sheet which reflected my CASHFLOW on a monthly and a yearly basis. Anyway, that’s another story so let’s proceed to the expense tracking!
The first few days was challenging because I had a hard time remembering what I spent on. I created an excel file for it and categorized my expense into the following: Transport, Daily Food, Eating Out, Clothing, Tithes, Grocery (Non-Food), Entertainment/Travel, Gifts and Business Expense. You can choose to follow this categorization or feel free to make your own. If you don’t feel comfortable using MS Excel for this, you can download different expense tracker apps in Android or Apple App Store. 🙂
And then, I chose to spend 10 minutes every morning to record my expense and for two months now, I was able to acquire the habit of recording my expense so I want to share with you the things I’ve learned aside from achieving the objectives I had in mind:
1. You will become AWARE on how much you are spending on a daily, weekly, monthly and yearly basis.
That is the most basic objective. It is important to know how your old ways of thinking and acting have gotten to where you are right now financially. When you become aware, you will know what to do.
2. You will know WHAT you spend on and where your money flows.
I was able to clearly see where I spend my money. I found out that sometimes, I spend on things that I don’t really need or can do without. I’m not an impulsive buyer but there are certain things that we thought we can’t live without yet with the right awareness, we can actually do.
Think about this: Where does your money flow? Does it flow outwards (expense/liabilities) or inwards (savings, investment, assets)? Do you know where it goes each month? What is your biggest challenge when it comes to spending?
3. You will know how to budget and use your money wisely.
When people hear the word budget, they cringe. Budget is not a bad word. A budget is a tool to help us manage our money because it clearly shows us how much money is coming in and where it is going. It is very essential for a great money management.
When I started, I became aware that Eating out and Transportation were the biggest slices in my expense pie. Cutting my transport cost to reduce my expense is not an option because it is a necessity so what I did was, I bring my own baon everyday so I would lessen eating out. I stopped buying the Php 35.00 Black Brewed Coffee in Mcdo so I could save even more. Between March to April, I was able to save an additional Php 4,000.00. I’m thrilled to save more! Yahoo!!!
4. You can distinguish WANTS from NEEDS.
Most of the time, what we want isn’t what we need. We need only need the basic: food, shelter, clothing. But most of the time, we want EVERYTHING else. You think you need the latest mobile phone? What you need is a device that will help you to communicate. You think you need a car? What you need is to get from point A to point B. You do not need fancy dinners or someone else to prepare your meal like a restaurant chef. What you need is food to fuel your body in order to live.
Contentment is contingent in our attitudes, not on our bank account.
When you can easily distinguish a need vs. a want, you will be able to Simplify.
5. You will acquire the habit of successfully managing your finances.
I believe that having money is a blessing and God would want us to enjoy our money. We are only stewards of this blessing so the universal principle of management is: Until you show you can handle what you’ve got, you won’t get anymore. It is not when you have plenty of money that you’ll begin to manage it. It is when you begin to manage it that you’ll have plenty. Being a good money manager means being cautious and aware of your spending habits.
Remember, the habit of managing money is more important than the amount.
The key is Involvement. When you commit 10-20 minutes per day to manage your finances, God will bless you with more. 🙂
May you be blessed!
“Now it is required that those who have been given a trust must prove faithful.” 1 Corinthians 4: 2
“From everyone who has been given much, much will be demanded; and from the one who has been entrusted with much, much more will be asked.” Luke 12: 48
Need help in managing your finances? Contact me for a free One-on-One Personal Finance Coaching. 🙂