If you don't know how much you spend each month, you won't know where you have overspent. Even the smallest purchases can mean that you won't have enough money to cover all your expenses for the month. Now, these may be new terms for you — but don’t be intimidated.

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Figure Out Where Your Money Is Going

Step 1: Create a Budget

  1. First, write down all of your sources of income (the money you earn) over the course of a month and calculate the total.

  2. Next, write down a list of all the expected expenses (money you spend) for the month, e.g. mortgage or rent, utilities, groceries, transportation, and calculate the total.

  3. Break expenses into two categories: fixed and variable.

    Fixed expenses are predictable. They stay the same from one time period to the next, like how much you spend on rent. Variable expenses change based on your daily spending decisions like eating at restaurants or buying clothes.


Which one of the options is not a fixed expense?

Step 2: Review Your Budget Monthly

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If, at the end of the month, you have money left over when you subtract your total income from your total expenses, you are off to a good start!

Any left over money you have at the end of the month, you can increase certain areas of your budget such as retirement savings. If you're in a situation where expenses are higher than income, you should look at your variable expenses to find areas to cut.

Step 3: Choose your method of tracking expenses

You can use a digital tool, like a spreadsheet, or a manual tool to stick to a budget. A budget is a way of managing your money to ensure you have enough to cover all of your key expenses.

Put another way, it makes sure that your income is greater or equal to your expenses.

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What does budgeting mean?

Use a spreadsheet

Here is a helpful video series that explains how to create a budget and track expenses in excel. You can use the same method with a pen and paper.

Use an app:

Tracking expenses can be cumbersome but there are several Apps that you can install on your smartphone that make it easier.

Here is a quick link that compares the various apps that you can install on your phone.

·         Mint, for saving more and spending less.

·         PocketGuard, for a simplified budgeting snapshot.

·         Clarity Money, for all-inclusive budgeting.

·         Goodbudget, for shared envelope-budgeting.

Some of these apps are free while others come at a monthly cost. Several of these apps also analyze your spending.

Use a Manual Process

If you don't have access to an app or Excel. Expense tracking can be done through a jar method.

Supplies needed:

  • Jars

  • Labels

  • Money

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Watch the below video for instructions:

You could use envelopes instead of jars. The key is starting the habit of tracking income and expenses.

Take Action

In order to stay on top of the day-to-day money management:

  1. Track all your money by creating a budget It’s important that you keep an accurate track of your income and costs.

  2. Review your costs. Reviewing them allows you to see what costs you are spending too much on and adjust accordingly.

  3. Make financial projections. Once you have a handle of where your money is going to, set some goals and plan for the future.

Before the end of the week, set aside some time to review your own spending and create a budget. Planning is the best way to take control of your financial future.


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