Tips on Reviewing Your Monthly Expenditure

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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.

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10 Responses to Tips on Reviewing Your Monthly Expenditure

  1. Solid advice! I think it’s especially important to not go on a shopping spree if you wind up with a budget surplus, as you mention. It’s a good idea to have a plan in place for what you will do with excess money if you have it.
    Dee @ Color Me Frugal recently posted..Top 6 Reasons to Look Your Bank Statements Over CarefullyMy Profile

  2. FI Pilgrim says:

    It’s really tough to save money “cold turkey”, so building in a little fun money is well worth it, for you sanity’s sake. :-)
    FI Pilgrim recently posted..Avoid Overspending When Throwing A Pity PartyMy Profile

  3. This is the single most important thing I recommend to anyone trying to change their financial future. You don’t know where you can improve until you write it down and review.
    Stefanie @ The Broke and Beautiful Life recently posted..How To Vacation When “Broke”.My Profile

  4. moneystepper says:

    Very straight-forward and sensible advice. Given how easy it is, its amazing that so many people struggle with debt just because they don’t do this process thoroughly!
    moneystepper recently posted..Become a millionaire in 20 years in 3 easy stepsMy Profile

  5. Pauline says:

    I review expenses once a year and try to get a better deal on utilities and broadband. You can save a lot over 12 months when you reduce your bills even by 10 pounds.
    Pauline recently posted..How to Create a College Student’s Monthly BudgetMy Profile

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