Personal Finance
Analyze Your Spending Habits for Financial Success
Want to achieve financial success? It’s time to start habit tracking.
Keeping an eye on your spending can give you a better idea of where your money is really going each month – and where you could be saving more. You can use that information to create a clear budget that matches your lifestyle and saving goals.
Ready to crunch the numbers? The experts at Origin are here with a list of easy tips to help you start saving.
Know your numbers
Before you start building your budget, you need to know what you’re working with. Start analyzing your spending with these step-by-step tips:
1. Pull your bank statements. For the most accurate picture of your spending, you first need to make a list of all of your accounts. Checking and savings accounts are a given, but how many credit cards do you have? Make sure to pull the past year’s worth of statements from every account. Then it’s time to start taking inventory.
2. What’s fixed and what’s variable? This step is all about getting a birds-eye view of your spending patterns. The first distinction you need to make is between fixed and variable expenses. Fixed expenses, like your mortgage, rent, insurance, and debt payments aren’t likely to change from month to month. Variable expenses, however – like food, clothing, entertainment, and travel – leave more room for adjustment.
3. Break it out into categories. Once you’ve determined which variable expenses are nice-to-haves rather than must-haves, start breaking down purchases into smaller categories. Some providers may automatically label your purchases with certain categories like “automotive” or “dining,” which can help you identify major themes. Whether you’re impulse buying when it comes to fashion or spending too much money on subscription services, grouping these purchases into spending buckets can help you see the big picture of where your money is going.
4. Look for patterns. Take a look at your entire year of spending, paying attention to times when you spent more than usual. For most people, this happens around vacations, holidays like Christmas or Thanksgiving, and even birthdays. And don’t forget about the one-off expenses that might catch you off guard each year, such as property or income tax season. Notice these patterns and make a note of them for next year so you can adjust your budget accordingly.
5. Use the data to create a new budget. Once you’ve taken a long hard look at your spending habits, it’s time to compare them to your income and translate into a realistic budget for the year ahead. An easy way to approach budgeting is creating three simple categories: must-haves (rent, food, bills, transportation), nice-to-haves (spending money, travel), and annual expenses (taxes, holiday funds). Add up your must-haves and annual expenses to create a baseline budget and save or spend the rest as you see fit.
6. Trim unnecessary expenses. Overspending? Pick an area or two where you can tighten your belt a bit. It’s all about setting financial goals and creating a budget that meets your needs. And while it’s tough to lower the big, fixed expenses like housing or utilities, shaving off some spending in variable categories like dining or shopping can give you some extra breathing room. Not sure where to start? Explore Origin Bank’s additional tips for how to clean up your finances.
7. Make space for savings. When preparing your budget, don’t forget to make room for savings. A savings account can serve as your emergency fund for unexpected expenses or a place to save for short-term or long-term goals like a car or travel. Find more tips on how to incorporate savings into your budget here.
8. Consider ways to earn more. If you’re struggling to move the needle on expenses, consider a side hustle. Whether you take on a part-time job, start an online business, or just list a few items for sale on a site like eBay or Facebook Marketplace, earning a little extra cash can help balance your budgeting equation. Need more ideas on ways to earn? Check out our Passive Income 101 blog for easy ways to generate a little extra spending money.
Ready to set yourself up for financial success? At Origin Bank, our trusted advisors are ready to help you reach your goals. Visit any of our locations to meet with us today, or explore our online blogs for more valuable advice.