Monitoring your spending
Most of us have been through periods where we have struggled financially to some degree or other. Perhaps we have got ourselves into debt or maybe it just meant living frugally for a period of time. Either way, one of the first things we will have tried to do will have been to reduce our spending. However, this is easier said than done. It can be hard to get an overview of where all of your money is going and without that information it can be hard to see where you might make savings.
Tracking your spending
The best way of getting decent perspective on where you are spending your money is through tracking your outgoings for a period of time. If you keep some sort of log, you can look back on the bigger picture at a later date and better see where mistakes have been made.
Step one is to find some way of recording what you’re spending. You can do this on paper, on a web-based program or using your phone – there are many apps which allow you to do this quickly and easily.
Step two is to do the job properly.
When recording what you’re spending, it’s easy to overlook all the little purchases. However, they all stack up. You need to get into the habit of recording everything, otherwise you’ll end up looking at your bank account and your outgoings and things still won’t add up and this is, after all, the whole point of the exercise.
For many people, the mere act of recording the information is enough to make them more conscious of how they are spending their money. You start to realise how often you stop and buy a coffee when you could just as easily make one. Or you realise that you eat out far more than you thought you did.
Your spending weakness could be anything. It might be impulse purchases at the checkout or haphazard supermarket shopping which sees produce thrown away at the end of the week.
By monitoring your spending, you will also gain a better understanding of what your money is worth. That sounds like a strange thing to say, but many people don’t really understand what their salary equates to in real terms. This is how people end up living beyond their means. They think they can afford more than they really can. When you keep a record of your outgoings, you see the reality.
Similarly, many people don’t really know how much of their money is left after all the essential spending on their home and bills have gone out of their account. In theory, it’s a simple enough calculation, but who honestly does that and even if you arrive at a figure, what does that mean in real terms? What does it really mean for your spending, spread over all sorts of different purchases, both essential and non-essential?
The key is to get a true picture. By keeping an accurate record, you see what you really do spend, not what you think you spend. Only then can you properly judge where you might be going wrong and where you might realistically be able to make savings.
Recognising habits and trends is a key means of ensuring you make the best use of the money you have available to you. It’s easy to get caught up on particular details or to only pay attention at a particular point in time. However, if you can gather together comprehensive data about where your money goes, you can make informed decisions and therefore better decisions.
www.taxrebate.co.uk have provided an insight into ways that anybody can monitor their spending and what this can show you statistically in the long term.