Most of us get paid a monthly salary and it can often seem to disappear very quickly. Once a chunk of tax is taken out it can seem like there is very little left to pay for everything that you need and want. However, many of us are not making the most of our salary and could find that it is being spent on things unnecessarily. In order to check, it is wise to find out more.
List down everything you buy and how much it costs
This may sound very tedious but the only way that you will be able to find out where your money is going is to note down what you spend. If you put everything on credit cards or use debit cards then it will all be listed on your statements and this will make it easier for you to see. If you use cash, you will not be able to see so easily and will need to note down what you are buying. It can be very interesting to see where your money goes. You may have no idea how much you spend on certain things and it could help you to understand this. It can also highlight how much you are paying for things and even show you items that you are paying or that you did not even realise. You might have subscriptions or donations leaving your account that you had forgotten about. It can be very interesting to see what is there. Obviously not each month will be the same and if you feel that things that you have bought are not what you would buy in a typical month, perhaps such as birthday gifts, holidays or new white goods then separate these out as exceptions.
Separate needs from wants
Once you have your list it is important to split the items up. Identify what items are ones that you need and which are things that are just wants or more luxurious. For example, you need to pay rent or mortgage, loan repayments and utilities but you do not need to buy newspapers, jewellery, flowers and things like that. It is important to remember that just because you are identifying that some things are necessary and some are not, it does not mean that you will have to stop buying those that are not. However, it will enable you to think harder about what you do and do not need and where your money is actually going.
At this point you will be able to think about whether you are spending money in a way that you want to. Although you will not be able to stop repaying loans or paying your rent, so you cannot stop buying things you need, you might be able to adjust your other spending. You might be able to change the type of things that you are buying or allocate your money so that you prioritise certain things over others. It might be that you find there is never enough money left to buy things you really want and now that you know what you are buying you might be able to spend less in some areas so that you have enough for what you really want.
It is also a really good idea to compare prices on every thing that you are paying out for. Even though there are certain things that you have to pay for or buy, you may be paying more than necessary for them. By comparing the prices on everything that you buy, you will be more aware of whether you are spending more than necessary. You may want to pay more for some things because you want better quality or a better service, but there may be a lot of things where you could pay less and you would not notice any difference.
Once you have done this, you may find that you will be able to reduce what you spend in quite a few areas. Even if you are just reducing spending by small amounts, these will add up and you could find that it will make a significant difference to the total amount that you spend. You could find that you will start to have enough money to buy the things that you want, to pay off loans or to put some into savings. It is good to continue to be aware of what you are spending though because then you will ensure that you are not wasting your hard-earned salary but only spending on things that you really need or that you really want. It is so easy to just buy things without checking how much they cost or without thinking about whether we really want them and this can lead to us not really enjoying out money.