Stay on course by keeping track of your finances

Recent news headlines indicate inflation could be set to reach 18% in 2023, meaning the cost of living is set to continue rising rapidly. For many, this will bring a host of difficulties where their personal finances are concerned. 

This article is, whilst not constituting financial advice, is ideal for anyone wishing to keep track of their personal or household finances and is designed to help identify where improvements in spending habits can be achieved. 

Typically, income and expenditure forms are used by creditors, such as a mortgage company or credit card company to identify a person’s affordability. If you are seeking credit, struggling to pay a debt, tried to extend your credit but were rejected, or you have tried to negotiate a payment with a creditor or your bank, it is highly likely you have been told to produce a financial statement or to complete an income and expenditure form. 

However, income and expenditure forms are not just useful for when dealing with creditors.  

Sometimes the best tools are already in the public domain for use but because they are associated with the difficult areas of life, like debt, they are overlooked by many. 

An income and expenditure form can help you understand and get to grips with your own personal finances, whilst enabling you to identify any areas where you could improve your current financial position. 

Creating an income and expenditure form? 

Instead of listing all the things you think you need to account for, you should know which ones are more important than others, and why. A good place to start is by looking at all your avenues of income. 

Your income 

This is where you should list any money you receive on a regular basis. This can include: 

It is important to include all types of income you receive. Doing so means you have an accurate picture of your situation. 

Priority expenditures 

Your household bills are your most important expenses, you must account for these on your income and expenditure form. These can include: 

Missing payments on any of the above could result in severe consequences to you and your family. For example, if you were to miss a mortgage payment, this could result in your home being repossessed. 

Additional costs 

Whilst these expenses are still important, they are not necessarily as important as your priority household bills. 

For example, if you cancel your mobile phone contract you may need to pay a bill for breaking the contract. However, the mobile phone company will not be able to impose the same consequences as, say, your mortgage provider if you failed to pay your mortgage on time. The amount left to pay to the mobile phone company would be classed as a non-priority debt, which we’ll cover later in this article. 

Additional costs include: 

This list of additional costs could extend into your day-to-day spending habits like food shopping, fuel, hairdressing and dental costs, sports, and entertainment to name a few. These are also referred to as your cost-of-living expenses. 

An effective way to identify your monthly spend on your living costs is to review your recent receipts and bank statements.  

Once you have taken note of your spending, you will be able to see if you are spending an excessive amount on non-essential living costs and start thinking of how you could adjust going forward to improve your situation. 

Non-Priority Debts 

It is important to list down any debts you currently owe along with the payments you are making to reduce them monthly. These could include: 

Please note that any of the above non-priority debts could become a priority debt if the creditor is granted a County Court Judgement (CCJ) by the court against you. 

Whilst listing your non-priority debts, make a note of their end date or when the repayment is completed. This will help you to identify a specific time in the future where your finances might improve and provides you with a goal to aim for. 

Can you do this yourself? 

In short, yes! 

Like most things, time is a precious commodity, but once you have built a template to keep track of your finances and populated the data from receipts or bank statements, you are all set to achieving a little peace of mind where your finances are concerned. 

To save you time in creating your own income and expenditure template, we have created one for you, available for download completely free to anyone wishing to take their finances seriously. 

With the cost of living increasing and creating tough times in many households across the country, our income and expenditure tracker will provide you with the ability to better track your finances. Allowing you to identify how you can stay on track during a challenging time. 

Download our Income & Expenditure Tracker below. 

If you have any questions or require any further assistance, please do not hesitate to contact a member of our team.