Methods Of Tracking Expenses For Building A Better Budget
Building a better budget without tracking expenses is simply impossible. To achieve financial stability and freedom, you should know exactly where your money is going to adjust your expenses and start saving towards your goals. This is why it is important to have these four methods to help you begin on the right path – especially if it is your first time budgeting. Plus, you can combine methods to go even further! Keep on reading about each of the four expense-tracking methods to learn which would work for you.
Use These 4 Methods Of Tracking Expenses Easily
1. Regularly Checking Account Statements
The first thing you should do to start tracking expenses is download your checking account and credit card statements at least once a month. If you’re just getting started, ideally, you would want to get your bank statement for the last 2-3 months, so that you can identify your spending patterns. The first thing you should do is make sure that there are no errors. You might find that one of the transactions might have been recorded for the wrong amount or recorded twice.
Furthermore, you might still be paying for a service that you haven’t used for ages. Once you have checked the statements for errors, identify your fixed and variable expenses. The former are, most likely, your rent, insurance, and utilities. Those do not dramatically change from month to month. This means that if you want to start building a better budget, you would have to start adjusting the variable expenses (food, clothing, travel, etc.).
2. Categorizing Your Expenses
One of the best ways of organizing your budget is by dividing your expenses into ‘needs’ and ‘wants’. Though you can build a better budget by attempting to downgrade some of your ‘needs’, you will see faster results if you manage to cut down how much you spend on the ‘wants' category. You can easily do that by meal planning, attending free events in your city, and so on. Here is a better breakdown of the ‘needs’ and ‘wants’ we are talking about:
- ‘Needs’ are the expenses that you cannot avoid, and they typically account for around 50% of your overall spending. Housing, transportation, health care, insurance, groceries, child care – you would have to always make sure that you have enough money in your account to take care of these expenses.
- ‘Wants’ are the expenses that you can survive without, but they make your life a lot more pleasant. The majority of people would typically be able to afford to spend 30% of their income on this category which can include dining out, alcohol, event tickets, gym memberships, clothing, streaming packages, and so on.
3. Using Expense-Tracking Apps
There are quite a few amazing free apps that you can use to record your daily expenses and monitor your finances. These apps will definitely come in handy when you are trying to start building a better budget. Mint, for example, allows you to sync your account with your bank account so that you don’t have to manually type in every transaction. You can also set savings goals, track your investments, and set bill payment reminders.
4. Taking Advantage Of The Envelope System
If you are the type of person who prefers to use cash, then the envelope system might be the best way to build a better budget for you. At the start of the month (or once you receive your paycheck), put your cash into separate envelopes. You can have one for groceries, one for entertainment, and so on. With such a system, you’ll know exactly when to slow down with your spending as you will see the envelope get slimmer.
What If You Have Emergency Expenses?
It might take you quite a few months to establish a reserve fund with the help of the tips mentioned above. Unfortunately, during that time anything can happen. If you need to urgently cover unexpected travel expenses, medical bills, or important house repairs, then you might want to consider going for a title loan. With a loan, you can take care of your emergency in the shortest timeframe and quickly get back on track with your newly acquired budgeting habits.
With us at Southwest Title Loans, you might get approved for a title loan and get up to $15,000 based on your vehicle’s overall condition and resale value. You can receive the money in exchange for your vehicle’s lien-free title used as collateral. To get the process started, fill out the quick online form on our website, get on the phone with one of our loan representatives, and schedule an in-person meeting. We can help get you through the rest of the process in as little as 30 minutes.
Start Tracking Your Expenses Easily Today
If you want to get on the path to building a better budget, you should start tracking your expenses. Very soon, you’ll be able to set aside your first sum and get one step closer to achieving your goals. But your plan can easily get messed up if an unexpected bill shows up. If that happens, don’t worry – you can take out a title loan offered by Southwest Title Loans and get back to your regular life in no time. Fill out a short form right now to let us help you get through the process today!
Note: The content provided in this article is only for informational purposes, and you should contact your financial advisor about your specific financial situation.