Getting your financials organised is always seen as the best way for budgeting. It gives you a good insight into your spending habits as well as your cash flow. You also will be able to spot any usual transactions that may be a result of fraud or errors.
There are many software programs that you can choose from to track your expenses. Some banks offer online banking features that are so robust that you can rely on for tracking your account and credit card activities.
But even if you’re not tech savvy and you want to do it yourself, a spreadsheet or an organised notepad can do the job. All you will need to do is to track your income and expenses, and assign your expenses some labels like: Utilities, groceries, entertainment, etc. Note the dates for regular expenses and payments, as well.
The goal of this exercise is to be able to conclude based on a quick glance at your spreadsheet the types of your expenses and their shares of your income. This, of course, could help you manage these expenses better by either reducing them or spacing them out. You may even find a reason to refinance some of your debts to bring down the monthly payments.
In addition, by looking at the dates of your major bills, you may be able to space them out through the month to match your cash flow, if you’d have this option. If not, you should be able to plan for these expenses so the beginning — or the end — of the month when all of them are due is not stressful.
It takes a lot of discipline, however, to keep track of all of these expenses, especially if you and others in your household are using multiple methods of payments, cards, etc. And it even gets more complicated if you’re banking with more than one bank and have auto-payments set up. Still there are ways to ensure that this exercise can be done successfully.
Build a routine
Trying to sit down at the end of the month and go through piles of credit cards receipts to match them with your statement entries could be a daunting task. You can make this easier if you establish a routine where you take a few minutes every day to update your spreadsheet and reconcile your receipts.
You also will need to have a list of your autopayments and follow up on them regularly. One drawback for auto-paying bills is how you may lose track of how much these bills take up of your budget every month. For example, you may miss a changing rate on utilities or an auto renewal on a service that you longer use. So make sure that you still go through these bills and examine how much you’re paying and for what.
Just like you’d note the dates for major bills — rent, car lease, school tuition, etc — you also should decide on when you’d be paying your credit card balances. Of course, you must pay these before they are due, but the question is when and what if you can’t afford paying the entire outstanding amount.
Having a set date for paying your credit card balances would help you know how much you’re spending on each card, and it also will help you avoid missing a due date that could cost you a high interest on your outstanding payment.
If your cash flow isn’t regular — not coming from a monthly salary, for example, knowing the payments that are coming up should keep you from splurging when a good chunk of income lands into your bank account.
In fact, many people whose income is seasonal or unpredict because of irregular work should try to budget for longer periods of time. For example, knowing that your income is likely to fall in summer, setting some money aside can be a good move. And your spreadsheet, software or even a notepad should help track your cash flow more efficiently.
The writer, a former Gulf News Business Features Editor, is a Seattle-based editor.
Use your budget
Keep track of your bills and their amounts
Space payments out based on your cash flow
Look out for suspicious transactions
Learn to manage expenses efficiently