Collecting receipts and writing down costs is not so boring as you think.
Many of us have tried to record expenses, without obtaining any results. The first time, I didn’t know where to start and I quickly gave up. The second attempt was much better. Now that you are reading this article, you have no excuses to avoid starting. You need to know your expenses, if you want to well manage your budget!
Why is it Important to Record your Expenses?
Will knowing what I’ve spent help me to recover the money that I have already lost? Of course not! No one will return it to you, just because you write on a paper what you bought. However, by recording your expenses you make sure that no one is going to steal your future money. I’m going to explain to you this.
If you write down your expenses, after a short time you will know where your money is going.
You’ll also know when money was spent in each category: payments of house, clothing, food, entertainment…
Okay, but how this will help me to spend less?
Let’s be realistic! No one becomes rich just by scoring the daily spending. However, by writing down and then analysing the expenses, you can plan next month costs – this is what we call having control of your finances.
Writing down the expenses is a fundamental part of the family budget.
You can’t make a good budget without recording your expenses, because without this, you will not be able to well plan your expenses in the future.
Some benefits of recording your expenses are:
You will understand your financial habits and will be able to make more purchase decisions.
You will be able to compare the prices of products and pay less.
You will be able to plan your future spending and take control of your finances.
I don’t want to write down expenses!
What if I don’t want to write down my expenses?
If your financial situation is very good, if you feel that you have all the control, if you know where your money is going, if you have no debts and no problems with spending “too much”, then you don’t need to write down your expenses.
However, if you are here, you are probably looking to improve your budget and achieve some financial goals.
Collection of receipts!
This is the first and most important step. You must collect, not just some, but all the receipts you get. Collect receipts must become a family habit.
If you live alone, it will be even easier to put it into practice.
Your goal is to collect all the receipts, even the very small ones. You’ve spent only $1 at the store? Take the receipt. Sometimes this will seem ridiculous; but sincerely, do you always remember what and for how much you have purchased things? Small expenditures are those who quickly we forget of, but are also important for our budget.
What if the seller does not give me a receipt?
If you’re shopping and at the time of paying the seller does not offer you a receipt, don’t be afraid to ask for it. If you request it kindly, you get it almost anywhere.
I asked for it, but still didn’t get a receipt…
You must be prepared for such situations. What should you do? You can always take with you a pencil and paper, where immediately after a purchase, you will write: date, purchased thing and by how much. It is simple and effective.
Another option: If you take a cell phone with you, you can make a note of your purchase. Personally I use Evernote, but you can use any other note program.
Rule Number One: If you have not received a receipt, write down your expenses in a paper so you don’t forget them.
write down your expenses
How often should I write down my expenses?
In my case, what works better is the daily spending. At the end of the day I sit at the computer, take all receipts of the day and distribute my expenditures among the categories of my budget. The entire process takes me 5-10 minutes.
If you do this for the first time, it will probably take you a little more time. Don’t worry! Every day will be easier and faster. You have to be constant, and after only a few weeks, recording your expenses will become one of your favourite habits.
One big advice: You must be responsible with your annotations and designate the exact time to do so. For example, 9 pm each day. It’s like a meeting with your finances.
Where should I write my expenses?
There are a lot of options. In general, I prefer this 3:
Piece of paper
Any program or application
The oldest method of recording expenditures is to do it using paper and pencil. It is still a good way, but it is time-consuming, especially if you have many expenses and you like to categorize them.
Fortunately, there are many applications that make it easier to keep track of expenses and also to manage a family budget. These softwares allow you to categorize costs, create detailed graphical reports, etc.
Personally, I record my expenses in Excel, where I can analyse my expenditures each month and throughout the year.
Last recommendation: When you have the receipts, the best, is to simultaneously record expenditures in the appropriate category. Cost of food in the category of food, cost of clothing in the category of clothing… It is the only and best way to create a budget.
Now that you know how simple and fast is to record your expenses, there is no reason for not start doing it. Furthermore, recording the expenses of your business is a must. Some failed startups committed this terrible mistake, so please avoid it.