How do you Track Your Cashflow to Avoid Overspending and Budget Effectively

If you’re like most people, you probably don’t have a good handle on your finances. In fact, most of us are terrible at budgeting and tracking our expenses. This can lead to overspending and, eventually, debt. But it doesn’t have to be this way! With a little bit of effort, you can get your finances under control. The first step is to track your cash flow.

Before we dive in, let us know the essence of cash flow. It's monitoring where income goes as you receive it, the incoming and outgoing flow of money.

Now for this blog post, I am going to show you how to track your cash flow so that you can avoid overspending. I’ll also share some practical tips on how to budget effectively. Ready? Let's go!

How do you Track Your Cashflow

Let's make it simple. For you to live below your means and avoid extra spending habits, is a need to track your cash flow. The following are the easiest ways of monitoring your cash flow.

1. Make a monthly list of everything you need to pay.

Having a record of everything you need to pay can be a helpful way to stay organized and on top of your finances. This can help you budget your money and make sure you are able to meet all of your bills and obligations.

Moreover, start by determining all of your bills like rent, utilities, internet, insurance, credit cards, etc. Once you've identified them all, go through and take note of the due date for each bill or payment. This will help you see at a glance when to pay and you're able to prepare ahead of time. Remember to list down everything you need to settle from your income and this includes setting aside for your savings or investments if any.

2. Classify all your payables and expenses.

For you to minimize or better avoid overspending, you need to categorize your expenses. You've learned above to list down everything you need to pay, right? So, from that list determine what are your needs and wants or urgent and important dues. For example, you categorize your rent, internet, utilities, and groceries as your needs. Then, your wants are some dining out (treating yourself as a reward), shopee parcels, or once in a while vacation/staycation. And you have a category for your savings and investments. Something like that and it's up to you how you label or name its category depending on your comfortability and easy to understand too. Well, I'm generous to share my simple template to help you too, track your cashflow. So, let me know in the comment section of this blog if you want it, or email me here.

3. Allocate a budget and cross-check actual spending.

A consistent budget plan helps you monitor all your spending or where your income goes. By doing so, surely you can minimize or avoid overspending. This is because you can see and check if certain spending is already out of budget or not.

Your budget allows you to cross-check your actual spending and able to plan out for the next month. This helps you spot spending that is not part of the budget and you can take necessary action to avoid such mistakes in handling finances. As much as possible consider sticking within your budget to avoid overspending and have smooth cash flow tracking. Eventually, as you consistently do the budget allocation and counterchecking with your actual spending, no more overspending in the future. Moreover, you can save more and invest more to grow your money.

4. Revisit your cash flow from time to time.

As you establish your strategy to track your cash flow, you need to evaluate and revisit it from time to time, especially if your expenses are growing. Having one shouldn't stop you to go over it and come up with an improved or leveled-up strategy. Making improvements and applying them will help you to be more cautious in tracking your bills or obligations and to avoid overspending. So, make it a habit of checking financials every now and then (I'm not saying every day, just allot a certain time), apply improvements, and don't stop learning from finance experts too.

Practical Tips to Budget Effectively

Budgeting is a key financial tool that can help you take control of your finances, save money, and achieve your financial goals. Thus, it's one helpful way to track your cashflow. Additionally, you've learned above that allocating a budget and sticking to it allows you to cross-check everything you spend or settle in actuality.

Here are some practical tips which I personally doing until now and somehow help me to be disciplined in my spending or finance handling.

1. Find a budgeting method.

The most common method is the 50/30/20 budget rule. It allocates 50% of your needs, 30% to wants, and 20% to savings or investments. Or you may maintain a spreadsheet or template which I've mentioned above to monitor your finances. Lastly, there are a lot of budget applications nowadays which make one's budgeting accessible through mobile phones.

2. Cut back unnecessary expenses.

As you revisit your cash flow from time to time, you'll identify expenses that are no longer beneficial to you or shows a huge percentage among the expenses. Additionally, you may see 1-2 costs that are related to each other which you can omit the other and retain the other one. For instance, if you allocate funds for watching movies in a cinema but you have a Netflix subscription. Why not maximize the use of Netflix in the comfort of your home plus unlimited movies in a day, right? You can save additional costs too, like transportation or food since such expenses are expected when going outside your house. So, think about it as wise action in lieu to track your cashflow.

3. Think before you purchase.

Speaking of thinking, here's another tip for you to budget effectively. Before you decide to purchase something, think about it many times. Weighing your purchase decision is a great strategy to not overspend. It's because as you get cautious, you tend to check your budget monitoring or cash flow. Then, you'll think the other way - either not buy it or buy it when you have extra money. Isn't that amazing and simple action of budgeting?

4. Automate payments if applicable.

Generally, automation applies to online payments or mobile banking. If you have bills payment that you can automate, then do so. It will help you budget effectively and of course, your bills are up-to-date enabling you to avoid extra charges when you forget due dates. In addition, you can automate your savings as well so that in every income you earned there's a sure part going to your savings. This may give you a little bit of technical skill depending on a bank application or site, however, a step-by-step guide is provided for you. Thus, nothing to be worried or scared of.

And that's it! I do hope through the above-mentioned simple tips and personally-doing ways, can help you track your cash flow with a disciplined budget in order to avoid overspending and live happily below your means.

Found helpful? Don't hesitate to share and let your friends learn too.

You may leave a comment to express your insight and I would love to read it.

Until the next blog!