Managing your expenses is the best way to prevent debt, but it can also be challenging. It's easy to ignore all of your budget's "leaks" you're caught up with work, family, and other responsibilities. You use your credit card to pay for groceries, rent, and other necessary purchases. With everything going on, it's difficult to keep track of your spending accurately. 

Let's look at how to budget and the important things to remember when planning your finances. Here below are the best way to manage your expenses, manage the budget and prioritise needs over your wants. ‍

Track your expenses‍

You are already aware of your income. But do you keep track of your spending? If you answered no, you need to be cautious. Regularly tracking your spending can provide you with an accurate picture of where your money is going and where you'd like it to go instead.

First, make a detailed list of where you spend your money. Try to do this for a week or, better yet, a month. You'll be surprised to learn where the majority of your money goes.

Furthermore, it will provide you with a better understanding of your daily and monthly expenses. There are numerous apps that allow you to do this calculation.‍

‍‍Prioritise your needs from desires‍

What are your true necessities for survival? Food, rent, electricity, and the salary of your domestic help! You can't survive without them.

If you buy everything you want even if you don't need it, you're being financially irresponsible, and it could have a big impact on you. If you are going to spend money on wants, it should not exceed 10% of your monthly income. The deal is that if you want to buy the things you want, you must earn more money.

But what about the pricey phone you purchased last month? Or the expensive gadgets you intend to purchase next month? Can you manage without them? You might be able to postpone such purchases for a while. These are your desires.‍

Budgeting‍

Ask yourself what spending is necessary and what isn't, keep in mind that treating yourself isn't "wrong." You should not feel bad if you enjoy wearing nice clothes or eating at fancy restaurants. The goal is to keep those expenses under control so that you don't go overboard and deplete your savings. 

This is where budgeting comes into play. Include all of your requirements. You can also set aside funds for a few of your desires. However, make sure you don't spend more than you earn, especially on things you can live without right away.

It's also a good idea to set aside some money each month. You can save it in a different savings account or invest it elsewhere.‍

Tip: Invest in a health plan that will benefit you and your family for the rest of your life.‍

You may not be flying to Paris or dining at the Ritz, but you are still spending money on yourself. That's all right. There's nothing wrong with a little extra spending money. However, to afford it, you must have a plan in place to manage your expenses. 

Examine your bank statements regularly to see where your money is going. You can also use a spreadsheet to organise and track your expenses. This will show you how much you're spending and allow you to start making adjustments to your expenses.

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