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It’s the little everyday spends that are often the problem, because bigger bills like the mortgage or rent loom large meaning they get priority attention.
If you feel like your finances are always doing their own wild thing, here’s an easy way to make a money-control template that’ll put you in charge.
A Really Easy Balance Sheet
By borrowing methods from bookkeeping and accounting (sshhh, say it quickly and it doesn’t hurt at all), you can turn the tables on money’s bad behaviour.
Take a notebook (or a spreadsheet if you prefer computer work) and on a fresh page make four columns. Head them like this:
- Date – that’s the date you make the purchase or when money comes in.
- Item – this is what you bought, or where income came from.
- Amount – how much you spent, or how much you earned.
- Balance – how much is in your bank account right now (you’ll need your latest statement, so you get an accurate picture)
These columns are your template. At the top of the balance column, write the amount currently in your bank account. As you fill in each row and column, either add or subtract the figure you’ve written in the ‘amount’ column from the number in the ‘balance’ column.
Include everything! Even a couple of Euro on coffee with friends. Remember, it’s the little spends that mount up when you’re not looking.
You only need a small notebook, and it only takes a couple of seconds to jot down a transaction. Making it a habit is the hardest part. After that, it’s simple.
One quick tip – don’t forget your direct debits. Write those in your records too or your balance won’t be accurate. You can write them down immediately when you start a new sheet because you know in advance when they’ll be paid.
Organise Your Receipts
When you buy something, make sure you get a receipt for it. Shops often ask if you want a receipt, so say ‘yes’, then save it till you’ve had chance to transfer the details to your notebook.
Doing this, you can save receipts up for a couple of days then spend a few extra minutes filling in your records. It’s a useful system if you don’t want the bother of noting expenses down straight away. Just don’t let them pile up too much.
Once you’ve transferred all the receipt details, you can safely throw them away – apart from the ones you want to keep in case you need to prove a purchase.
The bonus is you won’t have aged, yellow paper scraps littering kitchen drawers or filling up your purse or wallet.
The Magic in Numbers
The real power of a simple system like this comes into force once you have a couple of months of records to look back on. You can:
- Discover Spending Patterns – look in your ‘item’ column for repeated entries. Examples might be groceries, magazines, hobby gear, fuel for the car, alcohol, take-aways. There are hundreds more, obviously.
- Spot Savings Opportunities – Maybe you’re spending way more than you thought on little odds and ends you wouldn’t miss too much. You could channel those small spends into savings instead, without feeling too much of a pinch.
- Build a Financial Timeline – Digging into your numbers, you can figure out how much you could save or cut back, and how long it will take to build up a certain amount if you’re saving for something special. You’ll have a solid understanding of your money, and a concrete base to build better financial security on.
Over time, you’ll find new and better ways to use your financial records. You could, for instance, have two separate but linked pages of columns, one for your banking and one for cash spends. A ‘cash spends’ page works a bit like petty cash for a business and is an easier way to keep track of small, daily transactions.
This easy system is at the heart of all accounting, from basic household budgets to asset management in business. It’s money in, money out, and making it work as hard as possible on its journey. Learning about accounting can lead to a well-paid, professional career, so if you find it rewarding to manage your own money effectively you could find digging deeper even more so.