Tips on Reviewing Your Monthly Expenditure
The following is a guest post. If you’re interested in submitting a guest post, please check our guidelines on our contact page.
Reviewing your monthly expenditure is not the most fun you’ll ever have. In fact, in can seem like a frightful prospect to many of us. Unfortunately, it’s extremely important that you review your expenses every month, as it will impact your expenses the following month.
It’s too easy to buy things throughout the month and not realise how all your expenses add up to a deadly deficit. Monitoring your expenses is equally as important as monitoring your income.
Recording and understanding expenditure
The first step involved in reviewing your expenditure is to track down your expenses and record them. If you want to keep a tight budget, you need to accurately record your expenses, as soon as they happen, whether it’s through record books or budgeting apps on your smartphone.
There are two types of expenses: fixed and variable. Unavoidable expenses that need to be paid regularly are fixed expenses. Everything else falls under the second category is variable.
Compare your expenditure with your income
Once you’ve started tracking and recording your expenses, it’s time to compare them against your income. Subtract your monthly expenditure from your income figures: the amount you’ll be left with will be your monthly surplus, should the outcome be positive. On the other hand, if the outcome is in the red, you’ll have a monthly shortfall.
Don’t celebrate too much about having a surplus. You should still stick to your budget plan and monitor your expenditure carefully, so you can guarantee ‘smart spending’ in the future.
Reducing your expenditure
If your expenses overlap your income, you urgently need to reduce your expenditure. There are several ways you can go about doing this. First of all, you have to knock out your variable expenses, i.e. no more take-away food, no more extravagant shopping sprees.
Next, you have to review your fixed expenses and figure out how you can reduce them, too. For instance, if you think you’re paying too much for Internet, explore other options like fibre broadband from Virgin Media.
Being realistic and honest with yourself
Half the battle with controlling your expenditure is being realistic and honest with yourself about spending money. There’s no sense in setting up ridiculously tight budget parameters you know you won’t be able to stick to.
Likewise, you need to be honest with yourself regarding variable expenses. There can be no ‘cheating’: if you’ve decided to stop buying a cup of coffee every morning before work, you’ll only cheat yourself if you decide to break the rule even once.
So reviewing your monthly expenditure will never be a hoot. However, you can make it less painful by sticking to a budget and being realistic with the way you spend your money. Instead of dreading your review days, you’ll actually look forward to seeing how much money you’ve saved.