|Monitoring expenses is not difficult unless you're lazy!|
"It's difficult at first but it became easy as I you get used to it....besides it is very important so you can see on things that you can improved in your expenses," I replied.
"Still..doing that is next to impossible. I bought a lot of things in a day, how can you expect me to write them all?"
"Well, that's exactly why you can't save money because you spend too much. You buy a lot of things that maybe some are not needed. Wealth-building is not zero effort." I barked back at him.
This is my discussion with one of my high school friend when he asked me to help him make a financial plan.
He works as an IT consultant in Singapore and his net income is above P250,000 when converted to our currency. Despite having no other mouth to feed (he is single), his credit card debts are huge that I want to slap him a thousand times just to wake up and do something about his lavish lifestyle.
Everybody wants to get rich but majority doesn’t want to make sacrifices and effort to attain it. Like my friend, they update their Facebook status every minute and yet they find it very difficult to jot down the items that they bought. Monitoring expenses is a very powerful tool in managing expenses and wealth as a whole. Below are the advantages of monitoring expenses:
1. It will help you to identify your needs which will be your starting point in making a budget plan.
2. It will make you identify items that are not needed so you can cut them back in your spending.
3. It will make you aware of the items that eats your income and yet you consider as “petty things” (e.g. cigarette, cellphone load, taxi fare and etc).
4. It will make you aware if you’re spending is already exceeding your income which means you’re entering the debt zone.
5. It will make you think twice of buying expensive things.
6. It will help you to reduce your urge to buy since it is troublesome to write it.
7. It will make you stick to your budget so you can save money for investment.
Honestly, monitoring expenses is a little tiresome in the beginning. However, as time goes by, it became a habit for me that I automatically do it. Here’s some tip how to monitor your expenses:
1. Just do it. This is a little effort but you can reap the rewards as your wealth grow
2. Keep those receipts and record it as soon as you have time.
3. Use your gadgets. Almost all people have mobile phones, some are even using smartphones. Guess what, you can record your expenses in the notepad of your cellphones. This will make your recording real time and will prevent you from missing any items.
4. Use spreadsheet. If you have internet connection, the best is to use google spreadsheet. Since it is available online, you can update your expenses table anytime and anywhere for as long as there is internet. If you don’t have internet, MS Excel or OpenOffice.org Calc is a better alternative. If you don’t have computer, use a small notebook and manually write it. Take note that my mom used only the back of free calendars to write her monthly expenses.
5. Review it every month. Do this so you can evaluate your spending activities and will remind you to stop buying nonsense items and to stick to your plan to get rich.