In the daily grind of life, it’s easy to forget all the minor expenses we incur with monthly payments, on top of our primary utility and housing costs. While the word “expenses” can be synonymous with big ticket items like rent or a mortgage, car payments, tuition and healthcare, it can also talk about food, leisure activities and parking tickets. In this article, we’ll learn how to sort them out and manage expenses efficiently.
Types of Expenses
There are five different types of expenses: weekly expenses, monthly expenses, yearly expenses, extraordinary expenses, and investments. If you live in a household with several family members, these may be multiplied by the number of family members.
Weekly, Monthly and Yearly Expenses
These expenses are relative to certain time period. For instance, you may pay for weekly bus tickets, monthly car insurance, and yearly electricity bill. These expenses are set, you already know you will have to pay them on a recurring basis.
You did not expect to pay for this expense at this time of the year, or at all in fact! Extraordinary expenses account for unpredicted situation, such as an accident, a medical bill or simply a new tax payment.
Investments or Projects
Some investments do account as expenses. For instance, college tuition is one of them. It is money you will have to have in a near or further future. In this category, you can also add a honey moon or family trip you’ve been wanting to do for a while. You can also add new office material or a new TV, etc.
Managing Expenses Efficiently
Now that we’ve covered the different types of expenses, let’s figure out way to manage them as efficiently as possible.
Know your expenses
The first step to managing expenses efficiently is to sit down and write out all your set expenses. This includes your weekly, monthly and yearly ones, but also any investment or project you would like to pay for this year.
Determine a budget
Now that you know your fixed expenses, you can start budgeting for your variable ones. To help you, you can help yourself in this article and download a free ressource for further insights. Determining a budget will help you manage your small expenses more efficiently and not overspend money.
Set money aside
In case you override your budget or face an extraordinary expense, it is important that you have an accessible amount of money set aside. It doesn’t have to represent all of your savings, but at least be a good portion of it. With this money, you can avoid getting into unmanageable debt.
Save money willfully
Saving money for no specific reason is the best way to end up spending it, or having it burnt by inflation. Think about setting up a separate savings account where you establish savings goals for specific projects or investments.
Download Finnt today
Finnt is a savings app that helps you keep track of expenses, monitor spendings and save money for family members, target and reach savings goals, and much more! We help you apply these tips to your household spendings. With Finnt, you can act as the Family CFO and start building wealth for your family.