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Accurate Expense Calculation Method to Avoid Deficits
An accurate expense total separates purchases from movements between your accounts. Reconcile the result to opening and closing balances before interpreting spending categories.
Define the accounts and period
Fictional example: opening bank balance 600 and cash 40, total 640. No income arrives during the selected period. A withdrawal of 100 moves money from bank to wallet; the combined balance remains 640.
Record consumption and refunds
You pay 80 by card, spend cash of 25 and 15, and receive a refund of 20 linked to the card purchase. Net expense is 80 + 25 + 15 โ 20 = 100. Counting the withdrawal as another expense would incorrectly produce 200.
Reconcile closing balances
The bank ends at 600 โ 100 โ 80 + 20 = 440. The wallet ends at 40 + 100 โ 25 โ 15 = 100. Together they hold 540, exactly 640 โ 100. If actual cash differs, retain the difference as unresolved until a receipt or movement explains it.
Keep the accounting convention stable
Use the same date convention across periods. If a card purchase is already counted, its later settlement must not count as the same purchase again. Fees and interest are separate costs. Mark estimates rather than inventing precise missing transactions.
Compare like periods
A 31-day total and a 28-day total cover different durations. A daily average can help explain the difference, but does not predict future prices or exceptional bills.
For routine capture, see daily tracking. The review guide addresses decisions after reconciliation.
