A earns 6 figure salary, believes that lives decent life and not extravagant but still at the end of the month always devastated by looking at his bank account that he is left with so less. You never know where you spent all that money?
Does this sound familiar? Then A can be you. Where is the problem after all? The problem can be anywhere from someone duping you of your money to you duping yourself of your money. But how will you come to know?
There come two of my favorite tools of personal finance, tracking and budgeting. I know that they sound very intriguing to start with. Truth is they are pretty easy. You don't have to do it perfectly. It's OK if you miss entering few of expenses and still better then tracking absolutely nothing.
Start with it, for the first month, note down all the expenses. This will give you an approximate idea of where your money goes. Then try to look at the things that are more then what you thought them to be and see how logical your spending is? For example, if eating out comes to be double then what you expected them to be, check if you really need to eat out so often? Then do this again next month and once again the following month.
Make a budget and compare your expenses with your budget. Tweak your budget where needed and try to work on your expenses at other places.
Trust me; the toughest part of this whole process is the first step. Take it, jump on and fly.
How about you? Are you tracking savvy like me or scared of it?
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This is just my story. I am the "A".
ReplyDeleteI tried a lot but I could not "start" tracking my expenses.
I understand its importance but could not cross the toughest part.
Do you have any recommendations for any easier tool for tracking?
I use excel sheet to track.
ReplyDeleteAnd i have heard that ppl use mint to track the xpenses but personally i have never tried it.