How to Set Up a Cost Table to Organize Your Budget
In the day-to-day running, it’s difficult to know exactly how much money we still have to spend and still considering all the bills for the month that are yet to come. Generally, lack of personal financial control is what causes several people to stay in the red at the end of the month because they do not know when and how to spend their own money. The cost and revenue table is a tool that helps you make day-to-day decisions without compromising the budget, as well as allowing for adequate savings planning. Follow our step-by-step instructions on how to organize your personal finances:
The first and most important step to take the reins of your financial life is to understand that recording all expenses really makes a difference in budget control.
The simple act of jotting down in the cost table an everyday expense causes you to stop for a moment and think about what it means to be spending money on it. This reflection has a significant impact on your relationship with money.
The habit of recording all personal expenses, no matter how insignificant they may seem, requires a lot of discipline. Some people walk with a notepad, calendar, or even an application on their cell phone to write down everything they spend during the day.
The hardest part of this task is to convince yourself that all spending is important and should be noted, including small purchases.
Classify expenses and revenues
With expenses properly recorded, it is time to organize them. There are applications that help you organize your spending and revenue, and some even try to automate some of that process.
It does not matter what platform you will use to control your finances, if you prefer to put everything in a notebook or a worksheet. The important thing is to know how to classify your spending into categories that make sense.
To find out which categories are interesting for your spending control chart, consider what kind of activity you think has a significant cost of money and can save money.
Typically, spreadsheets are divided into fixed and variable accounts, including optional and leisure expenses. With such a division, it is easier to plan and know in which area you can save and which you can not.
Review the cost table
With your spreadsheet data in hand, it pays to invest some of your time at the end of the month to compare your budget with that of the previous month. So you can analyze which categories of expenses have most impacted your budget, which revenue areas were most significant, and how best to manage next month.
Financial management platforms and virtual spreadsheets are great tools for analysis, as they compare values, generate charts and can have different financial analysis functions. But the secret of doing an effective financial analysis is simplicity.
Compare the budget of the current month with that of the past only in what interests you and use indicators that make sense to you, such as the total balance of the month, how much was spent in the leisure category in the past months, and so on. So the analysis is going to be quick and you will have efficient indicators to plan the budget going forward.
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