Although the thought of How to organize monthly expenses, Seemingly intimidating at first, it becomes the first step towards financial literacy, successful money management, and goal achievement.
It's the control of finances that helps you determine a comfortable monthly budget, that is, one that satisfies your basic needs and wants, without leaving you with the feeling of living an inferior life. When budgeting for 2022, try to be more conscious about spending.
Don't skimp on the things you really enjoy, but cut back on the things that don't make you happier or improve your quality of life. This will provide a sustainable approach to saving, investing and helping to achieve a more stable financial future.
How to organize monthly expenses
So what is defined as an expense? In essence, expenses are all the money that goes out, not in, that's what you spend your finances on. For example, basic needs like rent, utility bills, food, medical care. Or is it something less essential: entertainment, travel, cosmetics, etc.
We have monthly income like salary and expenses like rent. This allows you to calculate your monthly budget, which is much easier to manage than your annual budget. To make the plan clearer and simpler, divide it into four separate categories:
- fixed costs
- Investments
- saving
- non-fixed expenses
Examples of Fixed Cost
Fixed expenses are something you can't refuse. This is something you really can't live without, and while you can't avoid these expenses, you can reduce them. They can include:
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- Housing expenses, such as rent or mortgage payments;
- Utilities such as electricity, gas and water;
- Meals: grocery stores, takeaways and restaurants;
- Transport: tickets, payment of gasoline and car maintenance, etc.
- Internet and cellular communication;
- Health care
Investments
Investing can help you save money that is constantly decreasing in value due to inflation. While some investments bring better long-term results, others will bring in money faster. Investment categories include:
- retirement accounts
- bonds, stocks
- savings accounts
- Coins
Savings can be used for different purposes: creating a savings account for each of the destinations. Possible options:
- Fund for unexpected expenses such as medical care or computer repair
- Big purchases, like a down payment on a house or car
- Scheduled expenses such as car maintenance
non-fixed expenses
Once you've taken care of the previous categories, you're left with money you can spend guilt-free. This is something that makes you happy, improves the quality of life, but it is not necessary. That is, for example:
- clothing
- dinners in restaurants
- Trips
- Visits to cinemas, museums, theaters
- Additional service subscriptions
How to organize monthly expenses
You don't need a personal manager or a complicated calculator for this: start with a simple list of all the expenses you have each month. Use simple apps to track your spending if you're not sure about your memory. Another option is to simply view your bank card payment history. Then, divide the expenses into the categories described above.
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Decide what the percentage between the categories will be. For example, some people adhere to the 50/20/30 rule: 50% of monthly income goes to obligatory expenses, 20% to paying off debt or savings, and the remaining 30% to everything else.
After finishing the classification and proportions, complete the plan in detail. For example, your household income is 100,000 reais per month after taxes. You may:
- 50%, that is, 50,000 reais to spend on mandatory expenses,
- 10%, that is, 10,000 reais to spend on debt payments,
- 20%, that is, investing 20,000 reais,
- 20%, that is, 20,000 reais to spend on whatever you want.
Keep in mind that your spending plan may change. For example, you get a new position and consequently earn more. Or vice versa, if you have to borrow money, you will have to take into account that the debt needs to be paid.
When planning your monthly expenses, it's helpful to understand why you're spending money this way. Try to make sure that what you earn goes to something that gives you positive emotions, whether it's a trip or a spa weekend.
For example, if you like fitness, a gym is a good way to spend money. If you have kids but want to go somewhere without them every now and then, paying for a babysitter is a great investment. The bottom line is don't deny yourself what you love. The key to success is a structured approach – instead of just limiting yourself, try simply to better organize your finances. This will help get rid of the fears associated with money, which often make financial decisions even more difficult.