The Dangers of Failing to Manage Your Monthly Expenses
We live in a world that is constantly changing. The way we work is changing, the way we consume media is changing, and the way we live our lives has changed too. Technology has progressed so much in recent years that it is almost unrecognizable from what it was a decade ago.
The one area of our lives where change hasn’t been as evident though is how we manage our monthly expenses. It’s surprising to see that even though there are many smart applications and services available on the market to help us track and manage our money better, more than 70% of people say they still find themselves struggling with their monthly expenses at least some of the time.
There are many dangers of failing to manage your monthly expenses. The most notable being that you could find yourself in debt. If you live paycheck to paycheck, then this is a frightening reality that may already be happening in your life.
Additionally, financial stress can lead to big changes in the way you live your life. It can make it difficult for you to focus on anything other than what needs to happen in order for you to make ends meet each month. For example, the money spent on clothes or food might be cut down significantly. Everything will become about taking care of the financial situation at hand making it difficult for one’s mental health and overall well-being in general.
Why are you Struggling with your Monthly Expenses?
What many people don’t realize though is that money management isn’t simply about having enough funds in your checking account to cover. When you are struggling financially, it can be easy to feel like you cannot get ahead. This feeling can lead many people down a path of financial difficulty that can be very hard to escape from. If you’re looking for ways to save money on your monthly expenses then it is important that you find a budget that works for you and your lifestyle.
The following are some of the common warning signs that signal your monthly expenses might be out of hand:
- You’re constantly in debt and need cash but don’t have anything to sell
- You’re constantly dipping into your savings in order to pay bills or buy food
- You find yourself struggling to keep up with student loans, credit card payments, and mortgage payments at the same time.
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What are the Major Categories that Make up Your Monthly Expenses
There are four different categories of monthly expenses – Fixed Expenses, Variable Expenses, Choice Expenses, and Special Occasion Expenses.
Fixed expenses are those which you have to pay every month. These include the rent or mortgage payment, car insurance premium, electricity/phone/internet bills, etc. They don’t change with time.
- Variable expenses are those that change every month depending on the expenditure you have made in that particular month.
- Choice expenses are those that are optional but still count as monthly expenses because they’re unavoidable if you want to live a certain lifestyle.
- Special occasion expense is what it sounds like – an expense which only happens once per year, for example, Christmas shopping for New Year’s Eve or your wedding anniversary gifts.
Keep Track of Your Spending For 30 Days
Many people spend money without thinking about it and end up with a negative balance in their bank account, which can be completely avoided by maintaining a detailed record of how much is spent and when. Keeping track of expenses will not only help you see your spending habits but also make you more aware of your savings. Take notes on what you bought, the where and when, and the amount spent.
The best way to start this practice is by downloading an app that will allow us to log every purchase. This way we can see exactly where all our money is going and how much we are spending in different categories. It will also help us create a budget that will help us stay on track with saving or spending more in certain areas. The key to having an accurate list is to make sure that what you are tracking includes all transactions (cash withdrawals, checks written, debit card transactions.
By tracking your spending for 30 days, you will have a better understanding of your spending habits and which expenses might be worth cutting down on.
