How to control finances?

We tell you where your money actually goes, how to start controlling your expenses, learn how to save and plan your budget for a month, six months and a year.

Understanding where money is spent and being in control of your finances is an important skill, even if you don't have to provide for anyone but yourself. This skill becomes even more necessary if you are responsible for the family budget, and other family members are in your care: children, elderly parents, and even your pets – because they depend on you. And if you're not good at controlling spending and budgeting, they can all suffer from it.

One of the most common causes of anxiety today is anxiety about your financial future, and it affects both women and men equally. To avoid this anxiety, you must always clearly know how much is in your wallet, when this money is supposed to run out, whether it will be enough until the next receipt of funds, whether you have financial insurance and what you can afford now, and what – only after a certain time.

The most convenient tool for solving all these problems is home bookkeeping. You can organize it the way you want. To manage your personal or family bookkeeping, it is not necessary to have an accounting education and even special courses will not be required. The only thing you need for this is the awareness of the need to control your finances and, possibly, a calculator.

HOME ACCOUNTING

Today, there are many ready-made solutions available on the digital market for every taste – these are money control programs that are installed on a computer, as well as all kinds of mobile applications. Some of them are available for free, others you can buy once and use them until the version is outdated or until you find a better way, there are some that require a regular subscription fee.

SO, HOME ACCOUNTING IS YOUR WAY TO CONTROL YOUR CURRENT EXPENSES, PLAN FOR THE FUTURE, EVALUATE IF YOUR INCOME IS ENOUGH AND SAVE MONEY.

However, you can do it on your own: the easiest way is to start a spreadsheet on your computer or a separate notebook or notebook if you are used to working with paper. The spreadsheet is convenient because it already has a built-in calculator: after spending some time entering standard formulas into the necessary boxes, you can always see the amounts of your expenses by category, as well as the difference between income and expenses, an increase in deferred funds, and so on.

Ready-made electronic solutions – special programs and applications – are beneficial in that you can connect debit and credit cards to them and track your consolidated balance. Some banking applications offer the same service for free or for an additional fee.

Consider the simplest way to control expenses using the example of a spreadsheet made on a computer manually, that is, on your own. If you have never thought about planning a personal budget before and just spent money while it was in your wallet, and at some point you were left without funds and counted the days until your next paycheck or borrowed money, then evaluate your expenses and approximately plan the next one. a month you can already after the first month of doing home accounting.

To plan large purchases, you need a little more observation of your own spending – about five to six months. After analyzing your expenses for the year, you will be able to plan the budget for the next year as accurately as possible.

If you have never gone beyond the available financial possibilities, but at the same time want to understand whether it is possible to save money on daily expenses, or if you are unable to save up for a large purchase, this article can also be useful to you.

MAGIC BOX

If you find it difficult to draw up a table and fill it out every night or lack discipline, try starting with a box of envelopes. Take a small box, for example, from shoes, conditionally divide it into two parts – for checks and for money – and put several envelopes in each.

First, think about what expenses are required of you each month and remain about the same? First of all, these are utility bills and rent. Set aside a little more than what you paid last month in the first envelope. Then the next envelope is probably car maintenance if you have one: gas, car wash, parking space. Then subscriptions for public transport, mobile communications, the Internet, if it is not included in the utility bill. Enough to start. Set aside the necessary amounts for these inevitable expenses and take money from these envelopes only when it is time to pay the appropriate bills.

Now take the remaining envelopes. Label them: food, clothes, household chemicals, cosmetics, entertainment, spending on a pet, and so on – categorize your usual expenses as much as possible. During the month, collect checks and arrange them in the appropriate envelopes. If somewhere you were not given a check or you bought something, for example, in the market, write down the amount in the notes on your phone, and in the evening transfer it with a pencil to the appropriate envelope.

At the end of the month, calculate the amount spent in each envelope and the grand total. Consider if some of these purchases were impulsive. And most importantly, compare the difference between your monthly income and expenses. To start saving — and this is necessary not only for some large purchases or foreign travel, but also for reliable financial insurance — the difference between your income and expenses should be at least 10%, and ideally not less than 15%. Naturally, the difference must be a positive sum, that is, with a plus sign. If the difference goes negative, then you are living beyond your means and getting into debt or living on credit, which is dangerous for falling into a financial hole.  

After practicing on a box of envelopes, switch to a spreadsheet – this option is most convenient. If you still feel uncomfortable using it every day, you can also collect checks, and fill out the table once a week or two.

REDUCING EXCESSIVE SPENDING

So, when you, after observing your expenses, form a rough idea about them, analyze them in more detail. Think: were all the purchases so necessary? Was it possible to do without something? Do you always spend money rationally? Have you ever thrown away spoiled food in a month? Did the new purchased item go to the shelf with others of the same kind that you bought and do not wear?

After realizing what you are spending money on, the next step is to reduce unnecessary expenses. Have you ever had a chance to go to the cinema with friends on Friday evening, and in the morning, after the cinema, disco, restaurant, bar and coffee shop, you were left with empty pockets? Have you justified buying another handbag by saying that you are stressed and you need to please yourself? Does it ever happen that you buy into advertising slogans and go to an electronics store for a thing that you didn't even think about buying yesterday? Are there books gathering dust on your shelf that you bought two years ago to read “next week”? If any of this sounds like you, then it's time to reevaluate your spending.

The first thing to stop is impulsive buying. Determine for yourself some conditional amount – for example, 1000 conditional units. Or 1500 thousand. Agree with yourself: everything that is more expensive than this amount should be a deliberate and planned purchase.

HAVE THE THOUGHT TO BUY SOMETHING WHICH COSTS MORE? PUT THIS THOUGHT UNTIL TOMORROW. AND NEXT TOMORROW, PLEASE CONSIDER IT: DO YOU REALLY NEED THIS? AND IF THE ANSWER IS YES, THEN ASK YOURSELF THE FOLLOWING QUESTION: IS IT POSSIBLE TO FIND A CHEAPER? HOWEVER, THIS IS A SAVINGS QUESTION WHICH WE WILL CONSIDER IN THE NEXT POINT.

The second thing you need to decide is the amount that you can spend on entertainment. If you notice a tendency to overspend at a bar or succumb to the persuasion of friends and spend the whole night, then going to a meeting, take a limited amount of cash with you, and leave the card at home. At some point, the money will simply run out, the main thing at this moment is not to start borrowing from friends “until tomorrow”. In the same way – with a limited amount of money in your pocket – you need to send to those places where it is personally tempting for you to spend more than allowed: clothing stores, if you are prone to shopaholism; bookstores, if an avid book collector; electronics stores if you can't live without new gadgets. When going to such places, think in advance what you want to buy, ask the price on the site, do not buy into the persuasions of consultants. Take clearly what you came for. Are you interested in something else along the way? Postpone the thought of this purchase until tomorrow.

Buying what you go for is a universal rule that should be followed everywhere, including grocery and hardware stores. Make a shopping list and stick to it. If you come to the store, you suddenly find that you forgot to enter salt there at home, take salt. But at the same time, you should not grab this from the shelf with salt, and this, and this. Just a list, just the essentials. And, of course, you should not go to the store hungry. This way you will buy much more than you need, and you will definitely take something that you did not plan.

LEARNING TO SAVE

Once you stop over-buying and learn to deny yourself impulse spending and start making shopping lists, the next step is saving. If there is no canteen or inexpensive cafe with business lunches near work, which is why the lion's share of your salary is spent on lunches at a restaurant, you should reconsider your approach to nutrition. A homemade lunch in a convenient lunchbox will cost much less, even if its “cost” includes not only the price of products, but also the time spent on cooking.

Buying food in a convenience store can be convenient, but not profitable. It is much more profitable to buy non-perishable products and household chemicals once a week in a hypermarket or in a small wholesale store. In summer and autumn, during the period of the new harvest, favorable prices are in the markets. Another way to save money, and at the same time take care of the environment, is to stop buying bottled water and grocery bags. The latter can be replaced with a canvas bag or a shopping bag, which will not take up much space in your purse, and filtered water can be poured at home before going out into a nice reusable bottle.

Turn off the lights in the room when you leave it, unplug electrical appliances when not in use, turn off the water while brushing your teeth, washing dishes, applying a hair mask. All these small restrictions, from which you will not suffer in the least, will also contribute to saving you money. Review your tariff on your smartphone: are you spending the allotted gigabytes and minutes? Does your operator have a better and better tariff for you?

Review your spending spreadsheet for several months: have there been any spikes in any of the graphs? Think about what it was about? Can this cost increase be avoided?

PLANNING A BUDGET

The main thing for which all this was started – cost control, savings, rejection of sudden purchases – is the ability to plan your budget with confidence. What does it mean? Now everything will become clear. Remember the envelopes with the inevitable expenses in the box and the shopping list? In fact, this is budget planning for the near future. The next tool to master is long-term planning.

The first thing you need to decide is whether you have debts or loans? If yes, then this is the axis around which your budget will be built until the loan is repaid and the debt repaid. Monthly, receiving a salary, the first thing to do is to repay the loan payment or set aside a certain equal amount from the debt and not touch this money under any pretext. Alas, they are no longer yours.

If you do not have debts, then your axes are deferred funds and inevitable expenses. The first is the so-called stash, an emergency reserve, money for a rainy day and just in case. It is necessary to have them. Spending is not allowed. Unfortunately, anything can happen: injury, serious illness, fire, trouble. It is impossible to predict what awaits us, but it is quite possible to make sure. Keeping this money in cash or in a bank is up to you, the main thing to do with it is to save it. You can set up an automatic transfer of 10 – 15% of the funds received on the card to a savings account.

THE SECOND AXIS IS THE INEVITABLE PAYMENTS: RENT, UTILITIES, COMMUNICATIONS, TRANSPORT, MAINTENANCE OF THE CAR, INSURANCE, KINDERGARTEN, COURSES, CUPS AND OTHER NECESSARY THINGS THAT HAVE TO BE PAYED ONCE A MONTH.

If possible, set up auto payment or keep the funds until the day of payment in the same envelopes, which, like the stash, are inviolable. This money should be spent only for its intended purpose.

Set aside certain amounts for the rest of everyday expenses, focusing on the indicators of previous months. Try not to go beyond these limits. If by the day the new funds arrive, something remains unspent (in addition to the emergency reserve and money set aside for inevitable expenses), put it in reserve. This is your additional insurance in case of emergency expenses – breakdown of small household appliances, a filling falling out of a tooth, a sick cat, and so on. If you do not fit within the given framework, you need to reconsider your expenses again.

Large purchases and travel must also be included in the budget. They need to be planned at least six months in advance and set aside equal amounts from each receipt of funds. If you find it difficult to save up for some thing that you need, add it to your wish list and tell your family and friends about it. Give them the opportunity to give it to you as a birthday gift or add the missing amount to your piggy bank.

HACKS

Here are some helpful tips to help you save money, control your spending, and plan your personal and family budget.

– Get a piggy bank. It is not necessary to buy a ceramic pig, a glass jar with a slot in the lid is enough. Once a week (or every evening – whichever is more convenient for you), pour into it a heavy trifle that has accumulated in your pockets or purse. Leave ten to twenty conventional units in small coins, and send the rest to the piggy bank. You can exchange coins for banknotes at any bank branch, so quite a serious amount can accumulate unnoticed for you in a year.

– Plan your vacation in advance – several months or even six months in advance. Last-minute trips are sometimes profitable, but do not give freedom of choice. Buying tickets for a plane, train or concert in advance, as well as booking hotels ahead of time, you can save a lot.

– If you spend too much time with friends, offer more economical options for spending time. Close people will always understand your desire to cut spending.

– Use discount and accumulative cards, study the terms of loyalty programs, but never make a purchase decision only on the basis that you got a discount coupon: buying cheaper is, of course, more profitable, but not buying unnecessary is twice as profitable.