In order to manage your expenses, your finances, you would be required to understand your expenses. If you inquire anyone to tell you how much they usually spend on everything in a month, you should rest assured that they would not be able to do so.
Several people would actually not be aware about the total expenses they would generate any given month. It has been a problem, but there has been an easy solution for it. You should keep track of your expenses for one month. It should not be difficult for you. All you need to do is to take your receipts, go through your bank statements, and add up your expenses. It would be pertinent to remember to track your expenses paid by cash along with credit cards.
The idea here would be to have both fixed and variable expenses accounted for in order to get the aggregate amount. It would enable you to see the entire picture and understand how precisely to manage your expenses while going forward. You would also need to compare your overall performance with passage of time.
Understanding the income
You should ask anyone to tell you how much they would make a month. Chances are higher than they may not tell you, but they may know internally. That has been the difference between expenses and income. A majority of people would be aware of their monthly income, but have fewer understanding of their complete monthly expenses.
However, the point here is to know about your entire monthly expenses and subtract the same from the total income for the month in question. The results would depend on the following aspects:
- In the event of your expenses exceed the income amount, you should reduce the spending and expenses until the sum reaches zero.
- In the event of you save something from the income after making expenses, increase your debt payments or your savings.
Your understanding of income and expenses would help you handle your finances in the best manner possible.