When you've diligently tracked every expense but still see no improvement in your financial situation, you might wonder: where did it all go wrong? In reality, bookkeeping is just the beginning; the real key lies in how you use this data to change your spending habits and financial strategies.

Imagine if you could identify and eliminate the financial black holes hidden in your daily expenses, and then reallocate your resources—wouldn't your financial situation greatly improve? This article will guide you step by step on how to take actionable steps after bookkeeping to truly transform your financial future.

First things first: Re-examine your fixed costs

Some expenses like your rent remain relatively stable from month to month. That makes them easy to budget for, but also easy to overlook as possible ways to cut costs.

Perhaps inertia has kept you in the same apartment year after year, while you’ve gone from working in an office to working from home to working in an entirely different office at a new job. You must regularly reassess your fixed expenses based on your current situation. Does the place you’re currently renting still fit your needs and budget in terms of size, location, and heating and cooling costs? If you do the math on the rent, utilities, and your work commute, you find it worth the moving costs to relocate!

Look for the silly expenses

Imagine you have a wise friend reviewing your expenses, and they keep spotting things you just can’t explain.

Friend: Why did your water bill shoot up over the past 3 months?

You: Yeah, there’s a leaky faucet I keep meaning to get fixed.

Friend: You’re paying for 6 different language-learning apps. You must really be good at Spanish now.

You: Ah… Oui?

This isn’t to say you can’t keep expenses for things you’re actually enjoying. Just don’t let money drain from your accounts for no good reason.

Be honest about must-have vs. nice-to-have

This time, imagine your wise friend wiping your entire home and all your devices clean, just like a factory reset on your smartphone. Now that the financial clutter is cleared, what are the top things you must add back to your life? What could you be just as happy without? A couple of tips here:

• Reassess your entertainment needs. This category is notoriously expensive because it’s not as easy to see your digital clutter as it is to see the physical clutter in your house. Do you really need to subscribe to multiple streaming services all year round? Could you perhaps choose one service per quarter and binge the latest releases before unsubscribing and binge-watching on another paid service?

• It’s ok to compromise. There are many things you can compromise on without much impact. If your morning coffee's main purpose is to wake you up, you don't necessarily need to buy a well-known brand every day. Try walking a few extra steps to a convenience store and see if a more affordable option works just as well. If it can save you from that groggy feeling, then save the premium brand coffee for special occasions.

Move forward with planning your future!

Now that you have a better grasp and understanding of your expenses, take the next step to gain even more control and prepare for what lies ahead. You can read this article to learn how to forecast and plan for expenses: How to Plan for Large Expenses Without Stress