Simplifying Life Insurance in India

What are you looking for?

Hi There, We are working on our product and launching this soon.

Submit your details and we will notify you once we launch our Product.

Your Name

Phone Number

Date of Birth

What are you looking for?

Guaranteed Income Plan
Guaranteed Pension Plan
Money Back Plan
Single Premium Guaranteed Income Plan

Profession

{{itemType}}

Income Range

{{itemType}}

Company Name

How to Get Started with Tracking Monthly Expenses Easily?

Tracking monthly expenses helps you gather an idea about your spending patterns and where you spend most of your money.

Moreover, with proper tracking, you can modify your spending behaviours to reach your financial goals more effectively. That being said, you can track your monthly budget through many methods depending on your lifestyle and convenience. You can either monitor every transaction or track down your overall expenditure. So, please continue reading to get an idea of the different tracking methods.

How to Start Tracking Monthly Expenses?

Before starting the budget track, there are a few things you must keep in mind. For instance, you can start by separating your expenditures into three main categories, i.e., needs, wants and savings.

The following are the primary steps that you can follow to start monitoring your monthly expenses:

1. Check Your Account Statements

First, it is important that you check all your financial statements, including credit card usage, current account, etc. This will help you identify where you have spent your money and in what manner.

Your financial statement includes both variable and fixed expenses:

Fixed Expenses: These include your housing rent, electricity bills, loan repayments and other expenses that are likely to remain constant every month.
Variable Expenses: These include food and clothing expenses, lifestyle activities, travel, etc.

After tracking down your bank statements, you can readjust your spending accordingly to save more for the future or an upcoming goal.

2. Group Your Expenses

Categorising your expenses will give you a clear idea about the necessary and luxury spending. This not only aids in organising a proper budget but also in prioritising where you want to put more money.

As mentioned earlier, the easiest way to sort your budget is by classifying your expenses into three categories. They include:

Needs: The 50/30/20 rule can be helpful if you are new at budgeting. It means that 50% of your money should go into the necessary items, 30% should be spent on your wants, and the remaining 20% must go for savings and investment. Therefore, the category of needs constitutes the major portion of your spending. It generally consists of the following:
- Home loan, rent, or property tax.
- Utilities such as groceries, electricity bills, cooking gas, water, mobile and internet costs, etc.
- Car loan, petrol cost, insurance premiums or public transport costs.
- Health care costs such as insurance, medicines, and emergency medical costs.
- Life insurance premium (if any)
- Child care and education.
Wants: Your wants make up for 30% of your expenses. However, the spending of this category mainly falls under variable expenses and may vary every month. Moreover, since they do not have any fixed costs, you can make most of your budgetary adjustments in this category. It may include:
- Shopping, travel, etc.
- Movies, concerts or other events
- Dining out, long weekends
- Lifestyle activities such as gym, yoga, etc.
- Online subscriptions
- Beauty and self-care
- Home decorations or appliances
- Track Savings And Debt Repayment

You must ensure that your investments are not compromised for your wants. Following are the ways how you can increase your savings and investments:

Traditional savings account
PPF and EPF accounts
An emergency fund with high liquidity
Equity investment
Mutual fund
Fixed deposits, etc.

What are the Top Methods to Track Expenses?

Check out 4 best methods to track your expenses:

1. Paper and Pencil

This is one of the most traditional methods to monitor your spending is by maintaining a regular journal. The significant advantage of this method is that writing things down involves using your head. Consequently, keeping an active mind is vital when you are dealing with finances. Besides that, this method requires no technology; hence you are in complete control.

2. Activating SMS Alert for Each Transaction

Tracking your money is easy when your bank notifies you each time a transaction occurs. In addition to keeping track of your finances in real time, you can keep a handy record of these transactions for later review.

3. Digital Spreadsheet

Spreadsheets are also an excellent way to manually track down your budget. Only this takes place on a digital screen instead of a piece of paper. Therefore, there is a lower chance of losing the details you note down, and you can customise each sheet at your convenience. Moreover, a digital spreadsheet offers you an automatic summation of your expenses, saving you a substantial amount of time.

4. Monthly Budget Tracker

There are several applications for budgeting that allow you to set a monthly spending limit based on your income and expenses. These apps are mainly designed for mobile use. Therefore, if you are prepared to track your purchases, put in the work, and stay within your budget, these apps can be helpful.

What are the Benefits of Tracking Monthly Expenses?

Keeping proper track of your monthly expenses can help you in several aspects of your financial life.

So, check out the top 6 benefits of monitoring monthly expenses:

1. Better Organisation of Finances

With the help of the methods and tools mentioned earlier, you can keep your finances organised so that any time you need to make a change in your spending habits or require more savings, you can do it without hassle.

2. Identifying Spending Issues

Tracking your expenses on a regular basis will help identify the problem areas of your financial transactions. In addition, it provides a clear idea of where your money is coming and going so that you know how well you manage them and areas that need improvement.

3. Offering Better Control Over Your Finances

When you have a clear picture of your funds in front of you, you can make better decisions about future activities. Moreover, it will also show if you have lent or borrowed money from a friend or colleague that you might have forgotten about and help plan your monthly expenditures accordingly.

4. Reaching Your Goal Easily and Quickly

Everybody has specific goals and dreams in life. However, most of the goals you might have require adequate funding. While you might have a lot of savings and investments, it is important to learn how close you are to reaching your goals. You can track your budget every month to ensure how much you have saved and how long you yet have to go.

5. Encouraging Savings and Reducing Over-spending

While tracking down your money, you might be surprised to note the amount you spend on unnecessary purchases. Therefore, you can do the needful to eliminate such wastes and redirect your money towards saving for the future.

6. Keeping Away From Debts

When you have a clear idea of your income and expense, your money management skill also heightens. Hence, you can be more motivated to fund your needs and wants from the savings you make instead of borrowing. Moreover, your debt repayments may multiply if you do not monitor your finances well.

In essence, setting a budget is crucial when you have multiple financial responsibilities to take care of. However, if you do not monitor your day-to-day expenses, you may unknowingly exceed your budget.

Therefore, tracking monthly expenses is a great way to manage your finances successfully without facing any confusion about where your money is going. You can follow the simple steps mentioned above and create your own budget structure manually or use a budget tracking app for a quicker result.

FAQs about Tracking Monthly Expenses

What is the fastest and easiest way to track down my expenses?

You can track your expenses very quickly with the use of a budgeting app available at several online sites. These apps can be beneficial, especially if the manual method becomes confusing for you. It keeps an account of your income and outflow directly from your bank accounts, mobile wallets, credit cards, etc.

What is the importance of a spending tracker?

A spending tracker can be a beneficial tool that helps in formulating a monthly budget both for your personal finance or a small business. It keeps a record of your daily expenses from invoices, payment receipts, bank statements, etc. and offers a clear image of where you have spent your income.

What is a 50-30-20 rule?

50-30-20 is an effective budgeting rule, following which, you can categorise your expenses based on priority. It means that 50% of your income should favourably go towards your necessities, 30% of it should go towards your wants and the remaining 20% towards savings and investments.

I just started tracking my monthly expenses. How do I figure out if I can afford life insurance?

To see if you can afford life insurance, calculate your total monthly income and expenses, and track your savings. Understanding your spending habits will show how much you can allocate for premiums. Starting small is feasible; a basic term insurance plan can cost less than your monthly mobile bill.

Other Important Financial Planning Guides

Need for Financial Planning

Scope of Financial Planning in India

How to Choose a Portfolio Manager

How To Create Ten-Year Financial Plan

How to Become a Budget Analyst

Importance of Budgeting

Financial Planning For Entrepreneurs

Money Management for a Mentally Ill

How to Build Wealth In your 20s and 30s

How to Make a Budget Plan

High-Net-Worth Financial Planning