If you are struggling with managing your finances so as to avoid getting into debt, you are not alone. Being in your bank account overdraft can be helpful when you really need the facility, especially for short-term borrowing or in cases of emergency as a last resort. However, you can run into problems when you start relying too much on it. Going over your limit does not simply mean you have to repay what you owe, it also means that there are extra charges that are incurred. Effectively tracking your expenses can help you keep your finances in check so that you do not go overdraft. Here’s how:
- Keep Track of Your Spending
A sure way of effectively keeping track of your spending, is by itemizing your spending from time to time, and identifying areas where you can reduce expenses. If you find areas where you spent needlessly, like a gym membership you do not use, monthly subscription for magazines that you do not read and so on, it is advisable to cut them off.
Take a look at your card payments, withdrawals and so on. What was the money used for and where do the expenses leave your account balance? Understanding your overdraft is another way to keep track of your spending. You have to constantly know the state of your bank account so that you know when you are approaching your limit. Although you do not have much of a problem when you have access to authorized overdraft where there is an agreed borrowing limit, it is even worse if the overdraft is unauthorized, and no prior agreement has been made between you and your bank. Even so, it is always safer to manage your spending in such a way that you do not need this credit option in the first place.
- Monitor Your Budget
It is easy to go over your carefully drawn out budget if you do not consciously monitor it. You need to be sure that you can afford the expenses you have listed.
When you spend within a budget, you are better able to reduce the possibility of spending without first thinking about it, so that you do not spend spontaneously. Although it takes a lot of discipline, consistency with monitoring your budget helps you save more, helps you know where your money is going and keeps you debt-free.
- Make Use of Apps to Manage Your Money
There are a number of online tools and applications that can help you with getting your personal finance management right. A major challenge for many people with effectively tracking personal expenses is that they sometimes have to manage different bank accounts and pay different bills. Keeping up can be challenging. Thankfully, there are personal finance and management apps that help.