Analyze Your Spending: 12 Months to Financial Fitness



3 min. read

By: FCU Team

Make 2022 the year you achieve financial fitness! To help our members on their journey, we’re going to share twelve blogs throughout the year featuring financial fitness topics. This month, we’re looking at analyzing your spending.

What Are Your Expenses?

Do you know how much you’re spending every month? Most people likely wouldn’t be able to say with certainty, and that’s why it’s important to track your spending. You can split expenses into two easy to remember categories: fixed and variable expenses. Recurring expenses don’t change much from month to month, like rent, insurance and loan payments.

Variable expenses are those whose amount changes month-to-month. Food is a great example of a variable expense. In terms of grocery shopping, you may spend more in one month than another. For example, if you’re hosting a party, you’ll need to spend more on food, drinks, etc. Food can also be a variable expense when dining out, which can be expensive and change month-to-month depending on where you’re eating.

Start With Your Statements

A good way to start analyzing your spending is by looking at your bank statements. If you get your statements through the mail, always make sure you’re organizing them as you get them. If you get statements online, we’d encourage you to print them out, too. If you’re building a spending plan for 2022, you’ll need to analyze all of 2021.

Block out some time, sit down, put some music on and start to go through each statement, line by line. You’ll definitely find some fixed and variable expenses month after month. The occasional purchases that you can cut to save money may surprise you.

How to Cut Spending

Once you have evaluated your spending, it’s time to start taking steps to lower it.

Identify Areas of Overspending

Where do you spend the most money? A common example for many people is food, usually money spent on dining out. Look at each statement and calculate how much money is being spent on restaurants. If it’s too high, there’s a great opportunity to not only save money, but also eat healthier by cooking at home.

Cut Unneeded Expenses

Do you have a gym membership but don’t go to the gym? Is one of your streaming services going grossly underused? The costs for these don’t look too bad when just examined on a month-to-month basis. It’s when you add all the months up and look at the bigger picture that you see how costly they can be. Don’t be afraid to make cuts on these; you can always sign back up at a later time.

Discretionary Spending

Discretionary spending refers to spending on non-essential items, and these are purchased with any money you have left over after paying debts and expenses for the month. Go through your statements and calculate your discretionary spending, and curb some bad habits if you’re able to.

Come Together Now

Each of the previous suggestions alone may save you some money, but doing all of them together is where the real savings are! All you have to decide now is what to do with your new savings! Use it to pay down debts? Save for retirement? The possibilities are endless!