I believe that managing our money efficiently and covering everything we have to pay for, everything we want or have to buy and everything we would like to do, is a challenge that constantly accompanies us.
For almost no one it is a mystery that one of the simplest formulas for financial success consists of making intelligent use of your income, so that each month you manage to cover your needs, and also have a surplus with which you can invest, or save for some goal.
If you are one of those who wants to control your expenses and keep a statistic of where most of your money is going each month, there are many alternatives, such as keeping your own spreadsheet where you record all your expenses, or a notebook of notes, or an application to help you with this task. Today I would like to talk about Expense Manager, an App for Android that I started using almost a year ago, in order to have a clearer understanding of the amount of money I spend on the main items of the house. It is important to clarify that there are many Apps of this type on Android and also on iOS, so the principles that I am going to mention below, despite being specific to Expense Manager, apply equally to any type of App of this type, since the philosophy it will be the same. So without further ado, we are going to see what steps you should follow to make good control of your expenses, through an App like Expense Manager.
With Expense Manager, the job of keeping track of your personal finances becomes very easy. Basically the application focuses on generating a series of reports of your expenses according to what you are registering. Therefore, to begin, the first thing to define is the categories in which you want to keep track of your cats, for example you could create categories such as the following:
- Public services
- Loans – Credits – Cards
- Others <- be careful with this
It is important that you create as many categories as you consider, without going to the extreme of creating many because it will be difficult for you later to understand where your money is going having so many categories. On the other hand, it is equally counterproductive to create very few categories, because the real objective of the App would be hidden, which is to see which category is the one that occupies the most part of your budget. One recommendation of mine is that even though sometimes it is useful to create a category called “others”Where you will record all the expenses that do not fit in any of the above, make little use of itIn the end, this category tends to hide the possible suspicious expenses that take your money or mix unrelated expenses that will not give you any information or trends. I would say that if at the end of a month, the category “other” is the one that takes most of your income, it is because you are definitely misclassifying the expenses that you register in the application.
After you are satisfied with the categories you have created (keep in mind that they are not fixed, that is, you can change them whenever you need it later), the next thing you should do with Expense Manager is to set a monthly budget for each one of them, that is, how much do you expect to spend per month in each of these items, or at least in the most significant ones.
Although this step is optional, for me it is crucial, and although it may happen that at first you are not very clear about the values that you should put as a budget in each category, it is important that you consider them at least as an initial challenge. Then over time you can improve these budgets, as you see whether or not you are able to meet them.
The advantage of setting a good budget (which is realistic of course) is that the application will be comparing you at all times, how your expenses are going for each category with respect to your budget. In my opinion, this is one of the most useful points that Expense manager has, since If during the month you see that you are about to spend in your budget, for example to “entertainment” or to “Transportation”Then you are going to control or moderate your expenses in these categories, which otherwise you would not have present.
Alternatively, Expense Manager allows you to build a frequent income plan. That is, if you are an employee and your salary arrives every month divided into 2 fortnights always the same day of the month or you are paid a lease on a specific date each month, then you can leave this income programmed in the App so that you do not have it to register. The control of income in Expense manager is optional, since its objective is to control expenses. However, if you register your income, the application will make a monthly comparison between the money you earn and the money you spend, which is also very useful to understand if you are leaving a balance each month, or are spending more than what you earn in a few months.
After you have defined your categories, and your monthly budget, the next and most important thing is, of course, to record each expense you make at the time it occurs. This is where perseverance comes into play, because if you do not record all your expenses every time they occur, then the App will have no way to deliver the complete reports (so if you stop recording expenses, the only one who is deceived is yourself). In my experience, it has been easy for me to get into the habit that whenever I take out my wallet to pay for something or make a payment online, I immediately open the App and record the expense. Well, it is very common that one wants to register it later and ends up forgetting. The way to record an expense is very simple; You just put the amount spent, the category it applies to, the date the expense occurred, and a note to later remind you what the expense was about. For example in the category of “transportation“, You could record an expense with a note like”vehicle gasoline“Or another like”engine oil change” and so.
Finally, when at least a month has passed, it will be time to analyze the information collected. Y this is where all the effort pays off. Through the reports that Expense Manager gives you (or whatever App you use) you will be able to find out which category is costing you the most each month, or find a trend in your expenses over time. Some graphs or reports offered to the application are:
- Summary: It is a general graph that shows your total income so far this month vs your total spending so far this month, to obtain a quick data of how much money I have left or if on the contrary it already happens to me. It also gives you a detail of the global cat for each category.
- Record: It is the complete list of the expenses that you have registered since you started with the application. Here’s your whole expense history.
- Budget: It is the screen that compares your spending by category for the current month, vs the budget you set.
- Distribution: It is a pie diagram, where you can see more graphically, which category in the current month has taken the highest% of your expenses.
- Monthly yield: This graph analyzes all the history since you started recording your expenses, so that you can see how your cats have behaved each month. Do they stay even? they’re going up? Have I managed to reduce my expenses?
- Daily performance: If you think that there are days a week that cost you more than others, this graph will help you to see in the last week, which was the day that generated the most expenses.
Some actions that you can perform with Expense Manager or other similar Apps, and that can be very useful are:
- Make a recurring backup: Every so often it is good to make a backup of your data. Expense Manager, eg allows you to generate a file that you can send by email, or upload it to a cloud service such as Drop-Box.
- Export your data to see them in Excel: If you are one of those who loves Excel, you have the opportunity to export all your expense history from the App to make all kinds of reports or graphs in Excel that you can think of to analyze your personal finances.
- Put a blocking pin on the App. Remember that the information shown here is confidential, so protect access to this App with a password.
Then I leave the link to download the App
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