Start writing your monthly expenses down. It is better than crying over your bank statement

Akshata Kamath
Akshata KamathNov 01, 2022 | 15:56

Start writing your monthly expenses down. It is better than crying over your bank statement

Do you look at your expenses every month and feel overwhelmed? (Illustration: Seemon, DailyO)

When you write down your expenses in a notebook or a piece of paper, you benefit in three important ways: you make it a personal process, you enhance your motor memory (ie remember things better), and you feel more in control of your finances. But when it comes to browsing through your bank statement, you might tend to forget about your expenses the moment you shut your laptop.


So, in the last few months, I have been trying to experiment and improve my money management skills. This dawned on me after finding out about 'Kakeibo', ie the ancient Japanese skill of household money management. Since the Japanese are advanced experts in so many areas, I thought of giving their money management practices a shot. You could probably give it a shot too.

Method 1: Browsing through the bank statements at the end of the month. This has been the process I have historically followed. I usually have a set of fixed recurring expenses and withdrawals and since I categorize my expenses on an excel sheet, I sort of understand the kinds of expenses I have. I do a sum of all my monthly expenses and a category-wise total, but there are a lot of expenses that I often lose track of. And that's about it. Once the laptop is shut, I come out feeling slightly happy and relieved, but not very wise. I also feel overwhelmed and panicky sometimes. 

Method 2: These are the better ways of managing your money:

1. Dedicate a notebook to making your money observations and track all your expenses and incomes in this book. You can also add 'Why' you spend money on these expenses. Was it a necessary gift or was it to feel better about yourself? Or was it revenge shopping? Mapping your reasons helps you analyse and track your own behaviour and triggers.


For eg: I was recently traveling over the weekend and the constant traffic on the roads was frustrating. So when I came across a bookstall, I spent 200 bucks on a couple of novels that I didn't really need. Though I could classify this purchase as ''my wants or desires'',  in reality, this was just shopping on an impulse to get over the feeling of frustration.

2. You could also use the Japanese 'Kakeibo' method, where they create a specific type of budget before the month begins. In this budget, you split the month into weeks and track your expected income, savings, and common expenses budget every week/month.

  • Account for your weekly/ monthly income 
  • Less: Savings every week/month
  • Less: Recurring expenses every week/ month (eg: Rent, utility bills, EMIs)

Now you will ideally have some money left over after this calculation. Split this into four categories.

Now set aside a fixed amount of money as per this budget and stick to it. By the end of the week/ month, record your actual expenses and compare the budgeted vs actual expenses. This helps you evaluate what you are over and underspending on and helps you evaluate why you did so in a particular month.


How is Method 2 better? 

1. When you write, you concentrate: Writing down your financial goals on paper is scientifically known to be better for your memory than writing them down on apps or on a keyboard. The writing process activates the part of the brain that lets the information pass directly into your memory. Typing doesn't do that.

2. It makes you conscious about your money: The more you track your expenses and income by writing them down, the less you will tend to feel lost and clueless about your money situation. Writing things down in one place automatically brings your attention to them and helps your brain digest what you bought. Writing the WHY behind spending helps you really evaluate the trigger behind your spending. Even if you write ''I was bored'' as a reason- it will make you aware that boredom triggers you to spend unnecessarily. 

3. Better budgeting: Say you have to spend a high amount on gifts every June, October, and December. If you are aware of the approximate figures or the expense range,- you can budget for it in advance or manage your spending in the balance months according to your annual budget. You can only control your expenses when you are aware of them, so tracking category-wise expenses when they go up and down and the reasons can show your family habits and help you control costs in advance. It can help you avoid going over budget and getting into debt.

Acknowledging your money habits can make for a hilarious and rewarding record even after a few years since you can clearly spot trends and patterns. Though doing this may be tough in the first few days or weeks, the more you do it, the less daunting it gets.

Last updated: November 01, 2022 | 16:46
    Please log in
    I agree with DailyO's privacy policy