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Keeping a keen eye on your expenses can prevent you from falling into debt. This practice is beneficial in personal life as well as for your business. Monitoring your outflow of money, regardless of the mode of payment, ensures you adhere to a set daily or weekly budget, and avoid overspending. It’s also a useful way to flag any areas where you might be spending more than you should.
Card Payments
Such transactions provide unmatched convenience, be it an online payment or using a credit card terminal in-store. Some of these expenditures might be personal, meant for your home or family, while others might be channeled through a business account for items such as product materials. A smart move would be to keep personal and business expenses separate. Another wise approach is to maintain a savings account and transfer only the allotted budget to your primary account. This way, if your card gets declined, you’re immediately aware of overspending.
Cash Payments
Cash payments force discipline in spending as you can see exactly how much money is left in your wallet. But the downside is the potential loss of cash with no means of recovery. Hence it is safer to leave surplus money in your account or secure at home, instead of carrying all the cash with you.
Spreadsheets
Keeping an expense spreadsheet is a practical approach to financial management. It allows you to compare your income from different sources against your expenditures. A detailed list that includes even minor spends helps you understand how wisely you’re handling your finances. You may find a substantial amount being spent on non-essential items, confirming where improvements are needed, and revealing patterns and triggers of over-spending.
The goal is sensible money management, not depriving yourself of luxuries. It’s about balancing bill payments, savings, and indulging in what makes you happy, ensuring smooth financial sailing till your next payday.