For almost 6 years now I have kept a budget in an Excel file noting down all the incomes and expenses. Since I’ve used it for so long it works almost automatically for me. Every time I buy something I’ll add it to the corresponding category. For example daily groceries, eating out, utilities, sports and exercise, monthly subscriptions, fuel, car related expenses, electronics, books and education/trainings and so on. And lately obviously all the things related to renovating and furnishing the house. The latter is a big topic on it’s own and sometime soon I’ll write a separate longer post on that.
I’ve modified the categories slightly throughout the years but in a bigger picture they have stayed the same. That gives me the opportunity to see how my financials have changed during this time period. A couple of weeks ago I made a thorough analysis about how my expenses have developed in the past 6 years and it gave me a really good overview and also a great opportunity to think back how my life was set up back then and now.
Having this kind of budget is really valuable. First of all you eliminate (at least to some level) all unexpectancies and you’ll have a greater ease of mind due to that. Secondly it makes you think in a more detail where does your money come from and where does it go and most important of all – is there something that needs to be changed? Thirdly but not lastly it helps you make prognosis for the future based on the past transactions.
Nowadays there are countless different programs and apps that help you manage your finances, both free of charge and paid for but I’ve decided to stay with good old Excel. I’d say it’s not that important where and how exactly you keep track about it, the main thing is that you actually do it and do it consistently.
In conclusion if you’re not doing something similar I really recommend to at least try it for a couple of months. When you do it for a certain time it becomes a part of your daily routine and takes a minimum amount of time while giving back some really useful information!
All the best!