Why writing down expenses is important and how to do it?

Before you start writing down your expenses

A home budget is not a diary in which you write down what you did in the store today. Budget is planning. Putting your own expenses into appropriate categories and trying to predict what expenses each one requires. Thanks to this, you assign each zloty a specific task in a given month.

The reason for this action is simple. You need to know how much money you have already spent in a particular category and how much more you can spend in it. Only thanks to this, at the end of the month, you are able to objectively assess whether your budget is spinning or closer to the button from your pants after Christmas.

Writing down receipts without first preparing a budget is an art for art. Suppose that in the middle of the month you see that you have already spent 700 zł on food. What follows from this? Absolutely nothing. Such information is worthless, because you have nothing to refer to it, you have not prepared any assumptions.

However, when you assume that every month for food you should be enough for 900 PLN, and in the middle of this month you have already spent 700 PLN, then you receive a specific message. There's something wrong. The money goes away too fast. If this is your first month, you may have made the wrong assumptions about your spending levels. If you've been on a budget for a while, then either you've been hit by inflation or it's time to change the store where you shop. You may be getting too fat, but let's assume you're not.

If the discrepancies between plans and reality persist - do not give up. For the first few months, you get to know your true costs and only learn how to set target levels. The easiest way to do this is by drawing an average of a whole year or a minimum of several months. Give yourself time and don't give up.

Why is it worth writing down expenses?

Writing down expenses and earnings does not make sense, as long as you are only going to write them passively, without further analysis. Keep in mind that receipts are just data that you need to enter into the equation, but to make it complete, you need a set of information. Not only assumptions, but also confronting them with reality.

By controlling your monthly expense and earnings ratio, you are able to determine how much savings (or debts) you generate each month. This is how you know if the money deposited from each paycheck is enough for an irregular expense in half a year like car damage, property tax or vacation by the sea (where you rest and not sell waffles). You will also find out if you are not exaggerating in specific categories, even though you think you are in control of them.

How to write down expenses and not waste time?

To begin with, I will show you a popular method, promoted by many financial personalities, and how much time is wasted on it - so that you realize what gap separates good and bad advice.

Wrong method:

• Collect receipts and card payment confirmations.
• Assign them to the appropriate accounts and stack them into the appropriate stacks.
• Do this throughout the week.
• Take care of writing down expenses on the weekend.
• You no longer have any idea what was where.
• Spend a minimum of 1 hour on it.
• Cry like when your first school love laughed at your efforts.

Do you really want to spend 4 hours a month typing how much you spent on a candy bar and how much on pain pills, because your head is already bursting with this absurdity? That's 48 hours a year, totally wasted 2 days. Or do you keep full accounting in a limited liability company and misunderstood the home office a little?

Let's face it. There's no reason to waste so much time. It can be done better. I'll show you how I write down my expenses myself in less than 15 minutes a month.

Good method:

• Create a separate account or sub-account for purchases.
• Pay only from him.
• Write down your expenses every day.
• Build a habit, and with practice you will do it faster and faster.

Personally, when I return from shopping, I leave receipts next to the computer. When I sit in it, I enter expenses for the whole day in Excel. It takes me 20-30 seconds, and everything is in the right categories. Believe me, a quarter of an hour a month is not an exaggeration. I took measurements for an article on my own blog and it came out equal to 14 minutes and 57 seconds. At first you will not be so fast, but you will get along with being with your tool. A matter of habit.

Write down expenses even faster

Not every account can be assigned to one category in its entirety. It is obvious that you go to big shopping, where you buy food, cleaning products, small appliances and many other trinkets. Shelling individual items out of a receipt longer than your vacation is time consuming and tiring. You don't have to do this at all. There is a simple solution to work around the problem. All you have to do is stick to the product groups and ask for separate receipts, for example, for food and chemicals, when putting the goods on tape at the checkout. A moment of reflection at the shopping cart will save you the tedious addition of a dozen items at home.

In addition, if you do not like Excel or simply prefer the application on your phone, you can enter data into it immediately when leaving the store. Thanks to this, you completely get rid of the ritual of sitting down to receipts and allocating special time for this.

In the matter of spending time, apart from entering expenses, there is still only analysis and budget planning, but this is what we will deal with in the next materials.