By Christopher Cervantes, RFP

WE assumed that we knew how we handled our monthly expenses, but once you start tracking it, you will be amazed at what lesson it could give you at the end of the month.

One of the crucial steps anyone should take if they want to master their finances is to get to know their numbers. And when I say numbers, this is not just about how much money you earn but also how much money you spend at the end of the month.

If you want to be realistic about money management, knowing how much fixed and variable expenses are critical in understanding how your money disappears regularly.

I’m sure this is not the first time you’ve read an article about the importance of budgeting. You may have even ignored it many times in the past until you got to the critical point wherein you needed help to understand this subject. Like one of my coachees, he approached me seeking help on how she could ensure that she will have a better relationship with her money this time.

During the consultation, I learned that she had more than enough income more than her peer group. However, her assets and investment are almost the same or even below her friends, considering she earns more than them.

We spent an excellent whole one afternoon looking at her all-transaction history she made for the past three months. Her money is going to her regular car amortization and groceries and food. It is pretty high for her age and status, but that is not a big surprise. For the past quarter, she spent P28,000 for online food deliveries and P10,000 online subscriptions. I am not saying that her way of spending her hard-earned money is terrible, but maybe she didn’t realize how much these expenses would be if accumulated in a year, five years, or ten years.

Your monthly food allowance, amortization, or rent will not change from month to month, but your dining-out budget will. The reality is, how we spend each week is dramatically hard to estimate. Many lives have been ruined, relationships stumbled, or even committed suicide due to failure to take complete control of money. The first step to getting your finances on track is knowing where your money is going, and it’s easy to do it when you focus on a short timeframe.

You may use numerous tools to track your expenses, but using a pen and notebook is still more effective for me.

First, list your regular monthly bills: groceries, phone, amortization, rent, utilities, cable. Then closely monitor your out-of-the-pocket spending for a week like gas, meal, dining-out, personal items, entertainment, coffee, snacks. It would be best to track this either you pay it in cash, credit card, or online. Also, monitor how much money you are putting in investment, insurances, or savings accounts.

Once you do the above steps, you will be amazed to learn about your money behavior even for just one month, not to mention the great lesson you can understand.

Tracking your spending will help you understand the fluctuation of your money movement. For example, there are months that you are not spending that much, thereby giving you the chance to save more, and there are months that you are required to pay more that is causing you to rely on debts.

Looking at your expenses with complete honesty, you will also learn where you can cut back to save or invest more for your goals. Many people always look at spending as the quick solution for all their problems. If they have a weight problem, they enroll in an expensive gym or immediately buy a stationary bike. If they have a confidence issue, they bring their plastic money and swiple it to a costly clothing outlet.

Tracking your spending will help you realize that sometimes the happiness you are looking for is just hiding behind the peace of mind that financial discipline can give. Remember, the more secure you feel in your financial life, the less stress you will experience.

Budgeting may not be the ultimate solution to your financial problem during this pandemic but taking back the control you may have given up will give you a sense of stability. Of course, you may still enjoy impulsive spending; why not? But planning it will allow you to live a balanced life.