By Hiper Media Factory.

How many times have you checked the balance of your bank account at the end of the month and you don’t really know where you spent the money? Mortgage, electricity, food, whims… All these factors have an influence. Planning, keeping record, and review are essential to avoiding this situation.

As people get older, their expenses also change. For example, a 25 year old with a job would put their wage towards paying rent, shopping, travel… while a 40 year old has other priorities. They’re usually settled, must pay the mortgage, schooling for their children, a car… In any case, both of them have a goal: making ends meet without breaking the bank. Arriving at this point more “relaxed” financially is one of the more gratifying sensations.

One of the keys to making this happen is a proactive and not a reactive attitude. A proactive person plans, keeps record of, and reviews their expenses while keeping an eye on their credit card balance (they create a budget and anticipate possible unforeseen expenses…). On the other hand, a reactive person is one who does not keep track of their expenses and reacts impulsively to unforeseen circumstances.

That’s why, along with the “Rule of 50-30-20”, the “leisure box” and the “weekly ladder”, are another three simple ways which can be followed to understand what spend our money on.

Saving in order to create a backup fund

It is advisable to create, together with the family, a budget for calculating income and expenses at the start of the month. The mortgage payment, shopping, electricity, and water are home maintenance expenses. This way, it will be easier to know what to do to avoid being short on money at the end of the month. However, this isn’t the only goal. It is also important to keep in mind the option to save.

Despite that wages are normally consistent (except the incomes of businessmen or those who are self-employed), there might be months where you are confronted with more expenses than usual. For example, quarterly VAT, tax return… with some luck, some tax statements might grant you a return, but in this paragraph we must be cautious.

It is essential to rely on a financial cushion in times of difficulty and to make this happen the key is to save. The best way is to plan for this automatically. First, we must set aside at the beginning of month the amount of money we want to deposit into this fund on a monthly basis, taking into account that it must be an amount with which we feel comfortable, if possible. When this is decided, the next step is to order a periodic transfer from the account were the wage is deposited to another. Continuing this way, until the goal is reached.

We must keep in mind that this fund should meet two very important conditions:

• Availability, liquidity, i.e. access to the money in an easy and direct way.

• Security. Count on those with who won’t lose the money.

It’s advisable not to get obsessed with gaining profits through this fund. We must bear in mind the initial goal: having money saved when confronted with possible emergency situations.

Informing yourself about offers and market deals

Despite it being boring, there is always the option of going to several supermarkets to look for the best offers. However, there will certainly be someone amongst family, friends, and coworkers who knows where the best deals and products are depending on the relationship of price-quality. Shopping trends can be compared between them and this way we will be aware of what we spend and of what we save.

It is advisable to try to avoid impulsive purchases since, despite not thinking about it in the moment, such purchases are almost never necessary. This kind of consumption is savings worst enemy.

Tracking your budget through smartphone apps

The traditional methods of keeping track of expenses are disappearing little by little. Currently, the best and most comfortable way is to opt for smartphone apps that register every bank account movement (credit card payments, cash withdrawals, transfers…).

These are some of the most popular smartphone apps for keeping track of your expenses:

• Money Plan. In order to have a global lookout on incomes and expenses. This is an initiative of Banco Santander that allows the inclusion of bank accounts from other entities in order for money to be managed in a manner that is both easy and automated.
• Mobills Finanzas Personales. Ideal for managing the budget without excessive deviations. This app creates a personalized family or individual plan, records information by location and gives alerts ahead of time about pending payments. Also, it relies on interactive graphics in order to easily analyze the financial situation in real time and keep track of monthly expenses.
• Wallets. In order to complete a medium term savings goal. It shows graphically if estimates are being fulfilled. At the end of month, it offers a visual summary in order to make changes and put an end to unnecessary expenses or to increase savings.
• Fintonic. For keeping track of bank commissions. Financial products are usually linked to a series of commissions. Fintonic works as an optimizor, analyzing the FinScore (our attractiveness to banks), gives suggestions on how to improve it and negotiates with the entity to obtain better conditions for their financial products. Free on every smartphone.
• 52 semanas. Establishes a formula for saving almost without realizing it. It saves 1€ in the first week, 2€ in the second and so on up to the 52nd week. It is like a game, so it could be an educational tool to be used in the family since it is attractive to children.