‘Enrich’ing Your Finances - 5
Are there leaks in my finances and if so where are they?
By virtue of our transactions being done without much awareness, we tend to form spending habits over time. And then those habits take over from us and we become puppets.
If you disagree, look at the number of people who see an upto 40% off sign at a retail outlet, walk in and come out with a huge package containing things they never wanted to buy in the first place! And they do so in a regular frequency!!
Or consider the actions of people who continue to keep buying books regularly despite their complaint that they do not have the time to read them.
Or those who have a huge collection (and always growing) of CDs and cassettes but have not listened to them for quite a long time.
And there are many many more examples of spending habits replacing common sense and reasoning.
Are these habits bad? No not at all. But they have an impact on your savings and if you are concerned about your savings, you better take note of your spending patterns.
Enrich Software comes very handy in this. As you keep logging your transactions regularly, patterns are formed and you are informed.
Take for example, the Top Expenses Report from Enrich. You can generate this report for any period of time and you can get information of upto 99 Top Expenses.
What does this report show? It indicates the expense heads where you spent your money during that period in descending order. In other words, the expense head with the maximum amount is at the top, followed by the others. Normally, you would find that the top 5 or 10 expense heads would account for 80% or more of your total expenses during that period.
And so, if you are sensitive, you can identify the leaks from this report and take actions so that they do not figure in your next report for a subsequent period. For example, if you find ‘eating and entertainment’, figuring above your necessity items in the top expenses report, you can clearly see the pattern of your expenses that is impacting your savings in a much serious manner than what you otherwise thought.
Sometimes, in our eagerness to control expenditure, we turn our attention to items that are visible rather than impactful. That is why we take decisions to cut down newspaper or coffee, while something like penalties or interest charges on credit cards are the culprits. The top expenses report gives clear evidence of where the leak is and can be used to plan our lives and expenses in the future.
