It's easy to get caught up in using our debit and credit cards, forgetting that we have a budget to stick to with the effortless tapping-to-purchase (at most stores since COVID-19 hit and contactless purchases became the norm). Amidst these common behaviors, comes an increased need to analyze our spending habits.
Let's start with the basics and make what can be a daunting and overhelming task of analyzing our spending habits, a little bit easier.
Print out the last 3 months statements for your debit and credit cards.
Categorize your spending using different coloured highlighters (example: food category, gas category, fun and recreation category etc).
Tally up your categories using a calculator.
Divide these total calculations by 3 and this is your average expenditure in each respective category (food, gas, fun and recreation, etc). These numbers give you insight into where your money is being spent. Then, coupled with a spending journal or notebook, you can then go into further detail and analyze the how and why's behind the spending categories (for example: I spent an average of $500.00 per month on groceries in January, February and March because I was eating out more often due to not having a meal plan prepared).
For myself personally, I stick to cash-only budgets for my food, gas, health and fun money. I get paid bi-weekly and allocate where my money will go before my pay even hits my bank account. I then withdraw my allocated budget in each various category such as $130.00 for groceries, $80.00 for gas and $50.00 for fun money for a two week time frame until I get paid next. Once the money is spent, I don't spend any more. For example, if I've spent the $130.00 for groceries, I have no more money to spend on groceries for the remaining timeframe until my next pay period (unless I take excess money from another one of my categories such as gas or fun expense). Credit cards are used for recurring bills that I pay back in full each month before their respective due dates.
What did you learn about your own spending habits? Let me know in the comments below! Signed, Filipina Budget Girl.