You certainly have a general idea of your monthly income, but do you also know how much money you spend?  Do you save nothing at all or less than you would like to?

Finding a solid balance between income and expenses is crucial for most of us. You can save on a regular basis if you approach it wisely and with discipline. By doing this, you create a reserve for unforeseen costs, greater purchases and expenses, and possibly even investments.

This step-by-step guide will help you rapidly put it into action.

Track your finances. To measure is to know

Everything starts with carefully recording what comes in and what goes out. Once you have an overview of your current situation, you can look for possible improvements. Maybe you have a number of unnecessary subscriptions or other expenses. You may be able to save more than you thought.

Drawing up a household budget gives you a sense of control and peace of mind. This is how you take important steps toward healthy budget management.

How do you want to keep track of your income and expenses? This can be done old school with pen and paper, or digitally with, for example, an Excel file, or an app. You can even add payment accounts from other banks for an even more complete overview. Very handy! But sometimes it is better to keep track of the income and expenses yourself. You will then be more aware of it.

It is best to look back a few months because this gives a slightly better picture of your income and expenditure. But whatever you choose, make sure you write down all your purchases. So also all those lattes at that coffee shop, your internet purchases, or those many books. Because then you really become aware of the costs you incur.

Divide your income and expenses into categories

If you are an employee, you will receive approximately the same monthly wage twelve times, plus holiday pay and possibly a year-end bonus, mobility allowance, meal, and other checks… It is very useful to put all that data in a table or collect it on an app and know what you really get on your bill.

Take a moment to make an overview of your monthly and annual expenses using your bank account(s).

Divide the expenses into categories: food, restaurant visits, entertainment (concerts, cinema, etc.), mobility (car, bicycle, train, etc.), energy, education, loans, travel, insurance, etc.

Make a distinction between fixed costs (energy, loans, telephone, etc.) and variable costs (clothing, gifts, restaurant visits, travel, etc.). Variable expenses do not recur every month. Divide these into different categories as well. 

Do this for a few months and list the annual one-off costs (heating maintenance, insurance, etc.).

Also list what you save or invest each month.

Filled in everything? It may be a bit of a shock, but this will give you a clear insight. 

Are you spending too much in relation to your income or not saving as much as you would like? You immediately discover where there are savings opportunities. 

It is smart to take a closer look at your costs. What costs could you reduce or eliminate? Those lattes might only cost $4. But if you get three a week, that will soon be $48 per month.

Determine a budget for your monthly expenses

Ready to go further? Knowing your expenses and income will enable you to approach the situation differently. What amount are you hoping to save? What are your short- and long-term objectives? Purchasing a new racing bike or letting the children study? How long do you want to put that money aside?

After creating (virtual) envelopes for each spending category, you can begin budgeting. For instance, spend no more than x dollars per month on eating out, x dollars on leisure, and x dollars on apparel. If the funds are gone, you must wait until the following month. It sounds rough, but it’s effective.

Budgets can be controlled if you frequently assess how well you comply with them and make necessary adjustments.