Tuesday, May 18, 2010

What is an Expense Sheet?

Expense Sheet

Good day readers! Today (or actually during the whole coming month) we will be having an exercise; that is to create an expense sheet. You will need:
  1. A pen or a pencil.
  2. A notebook.
  3. A calculator.
The exercise is to try your best to write everything you spend throughout the month on a daily basis. At the end of each week you will use the calculator to subtract all your weekly expenses from the initial income. Let's take an example, shall we?

If your net income is JOD 410, according to last month's post you will have JOD 400 left to spend. Let your expenses for this week be:
JOD 20: Groceries
JOD 15: Gas for the car
JOD 35: Gym subscription
JOD 5: Dining out

The remaining of your salary would be:
400 - 20 - 15 - 35 - 5 = JOD 325
This number (JOD 325) should match the actual remaining money that you have (in you pocket + in your salary bank account); I call what we just did "closing the expense sheet". Expenses of the next week will be subtracted from the new balance (that is from the JOD 325). One more thing, I find it helpful to write down the date each time you close your expense sheet.
To me, it feels great to close the expense sheet! Nonetheless, you might expect some leakage every now and then. Here are my tips:
  • As a start, a maximum of 10% leakage is OK (in our example it would be a JOD 40 that you cannot remember how you spent).
  • Get a receipt whenever you can for what you pay (example: go to major supermarkets that give receipts). If no receipt is available you can write it as a note in your diary/ mobile device until you copy it to the expense sheet.
  • If you enjoy closing you expense sheet you can do it more frequently (twice a week for example). Take into consideration that if you make it very frequent (i.e. daily) you might end up hating managing your money affairs and this is not our goal here.
Although all an expense sheet does is to tell you where all your money did go, yet it helps you control your expenses. How is that?
First: During the month you are aware of how much money is left (i.e. No surprises at the end of the month).
Second: You can look back at your expenses, realize and do something about the major expenses that eat up your income.
Try it yourself and see the results.
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