A simple and effective way to manage finances in an hour per month

I will not claim that I know how to accumulate mountains of gold. But I, perhaps, manage to avoid unnecessary expenses. On the other hand, I am not a supporter of economy and excruciating doubts "to buy or not to buy." Therefore, I make a decision on purchases once a month, and on other days I only track my spending. But first things first.

Get into the habit of controlling costs

To begin with, you have to develop a habit of regularly writing down all your expenses.

At first, the easiest way is to use applications that have a basic list of categories and the ability to create your own. I do not advise looking for the perfect financial accounting utility. The main thing is to reinforce the habit of fixing expenses.

Define the main categories of expenses

After the first month of data collection, you will be able to identify the types of expenses for yourself. They do not have to correspond to the product categories in the stores. For example, milk, cakes and beer can be bought in one place. But I would categorize them in three different categories: groceries, treats, and entertainment. They better reflect the real value of the costs.

Financial management: expense categories

However, there shouldn't be too many categories. I see no reason to separate, say, meat and groceries. There is a certain set of products that I consider necessary. Everything else is goodies or entertainment.

Once you've gotten into the habit of recording expenses, you can create a simple spreadsheet (Numbers, Google, or Excel). Why did I stop using apps? They are overly functional: it is distracting and only complicates the task. On the other hand, the table for the entire month allows you to see the big picture. And I don't feel a lack of functionality either.

But at first, apps really help you fall in love with the expense tracking process.

Consider all expenses

To do this, you need to record expenses on a daily basis. I do this before bed, when I summarize the past day and make a list of tasks for the next. It does not take long, but it allows you to go to bed with a free head.

There is no point in getting paranoid and getting into your phone after every purchase. It's enough just not to throw away the checks until the end of the day. Yes, one check can contain expenses of different categories. But verbal counting is great brain training.

Don't expect to plan your budget perfectly right away. In fact, you will be adjusting it for several months: some categories will be combined, some will be highlighted from the "Other" item. To begin with, it is important to understand where the money goes and, most importantly, where it goes in vain.

Determine what your life is impossible without

Obligatory expenses are those that cannot be avoided. They need to be entered into the budget immediately in order to understand how much free money remains.

With fixed payments, for example, for renting an apartment, the easiest thing is: every month they are the same. Other expenses - buying household appliances or routine dental care - vary from month to month. You can work with them in two ways:

To allocate a certain share from the budget on a monthly basis so that the required amount accumulates by the planned date. For this, it is convenient to use separate accounts for each purpose, or envelopes if you prefer cash.
Allocate the entire required amount from the budget at the beginning of the month. I like this method more, since I do not like to think long ahead. But it has a drawback: there are hungry months, when almost the entire budget is spent on compulsory expenses.

Dealing with the balance is the most critical part of budget planning.

Determine what costs can and should be reduced

Budgeting is very individual and depends on your priorities.

Take, for example, buying a fitness center membership. On the one hand, you can save on this: run in the park, exercise on horizontal bars in the yard. And if you live in the center of Moscow, it's a sin not to take the opportunity to run along the embankment. It's another matter - the districts are worse and the cities are smaller. Broken pavement may be another reason for you to skip a workout. In this case, paying for the fitness center can be attributed to an optional but useful expense. You do not need to shorten them.

Another example is going to cinemas. Obviously, you can watch a movie at home. And many films really don't lose anything in doing so. But if you enjoy the big screen and are among the very first to enjoy the big screen, then your life will become less joyful without it. These expenses are considered optional, but pleasant. They also do not need to be cut as long as the budget allows.

But it often happens that we regularly buy something out of habit, when it no longer brings any benefit or pleasure. The simplest example is spending daily on delicacies from vending machines, while buying a kilogram of apples at the beginning of the week will be healthier for both the body and the wallet.

Driving your own car to work is also not always the best option. Perhaps one of your colleagues could give you a lift. And the situation with public transport is far from static: if three years ago the thought of traveling with transfers on clogged buses terrified you, it is not a fact that now there is no direct minibus from your house. By the way, this method of movement has its advantages: you can read or take a nap, instead of straining in traffic.

Deal with controversial spending

For those unnecessary expenses that raise doubts, I do this: make a list and rate the usefulness and attractiveness of each item on a three-point scale (from 0 to 2).

Spending that gains less than 1 point, of course, is completely excluded. Most likely, these are impulsive wishes.
I postpone the decision on spending that gain 1-2 points until next month. It's easier than denying yourself something while standing at the counter.
With a clear conscience, I pay expenses for 3-4 points to the budget and, if possible, make purchases at the beginning of the month.

As practice shows, expenses that were not planned can almost always wait until next month (with the exception of force majeure circumstances). I put all the wishes in a simple list and analyze when it comes time to plan the budget again.

It turns out that financial management takes literally a minute every evening and about half an hour at the end of the month. Just an hour frees me from worrying about money! Simple and without frustration.