🌈 A quick taster for you:
- Track your finances to better understand what you spend your money on.
- Feel clear about your income, your fixed expenses, and your variable expenses.
- If you know where your money is going then it’s easier to see where you can make some savings.
🧐 Why do I care?
- You get halfway through the month and your money is already completely gone. And you ask yourself yet again, “What am I actually spending my money on?” But don't panic, you’re not alone with this problem and there’s an easy solution: keeping a budget book. You’ll be amazed to see where your money goes!
- A budget book, really?! Isn't that sooo...2005? Or even more like 150 B.C.? Shouldn't there be a good app for that by now? Well, yes, there should be! We'll come back to that later.
🔍 What exactly is happening here?
- How does a budget book work?
In a budget book you record everything that has to do with your finances for two or three months:
Income: Net salary, extra income, pocket money, BAföG, cash gifts, sales, etc.
Fixed expenses: Rent, utilities, phone contract, gym membership, insurance, monthly travel tickets, etc.
Variable expenses: Shopping, going out, movies, eating out, takeaway coffees, clothes, taxis, etc.
That's right, you really track the cost of every coffee, and every euro you spend at the corner store. And no fibbing to yourself either!
- And where do I do that?
You can write everything down in a small notebook, create an Excel spreadsheet, or you could download an app. But, to be honest, there’s not yet a good app for this. So, we recommend keeping it analogue until the OWWN app is available to download.
It's a good idea to group your expenses by category. For example, you can group all housing expenses together, or clothing expenses. Most online bank accounts now provide a rough overview of your finances, and many also sort — often not very precisely — your expenses by category. While this can be helpful, your bank has no idea what you spend your cash on. Therefore, it’s best to track your own expenses.
At the end of the month you can then see exactly how much money you spend on different things, and how much money you have left over.
🤓 What does this mean for me?
Why should I do this?
Keeping a budget book gives you an overview of your finances. Therefore, it’s a great basis for your savings plan. Because, if you know where your money goes, then you can start to ask yourself which expenses are really necessary. Do I really want to spend 120€ every month on takeaway coffees? Do I really want to spend so much money on Ubers? And when you notice where you could easily save some money, then it feels easier to start putting some money aside. And, pretty soon, you'll have plenty of money left over at the end of the month!