As you are reading this article, you may already know the majority of people who overspend. The best way to prevent this bad habit (overspending) is to analyze what you spend. It is as simple as that.
The first step you need to do is see where you spend. Even if you are a high-income earner, your big salary will still get flushed down the toilet quickly if you do not track your finance. Know where your cash is flowing.
Should you keep notes of your spending? If you the following is true for you, then you have to.
- You know you are not saving much money to achieve monetary goals (if you have any)
- You have the intuition that your bad habit of spending is spiraling out of order. Suddenly all your income seems to disappear to unknown locations.
- A major event in life is about to happen. This major event can be marriage, quitting your day job to start your own business, having an offspring and retirement.
You may not need a spending analysis if you are a thrifty person. You already have the good habit of saving at the first place. No analysis is necessary at this point.
However, bear in mind that you do not need to keep track of everything till documenting takes up much of your time. In this case, tracking becomes meticulous. Instead, do the spending analysis in a way it reminds you of where your money goes to. This is a smarter and better way to analyze your finance.