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What are the Best Tips for Expenditure Management?

Article Details
  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 02 November 2018
  • Copyright Protected:
    2003-2018
    Conjecture Corporation
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Expenditure management is a broad term that has to do with the identification and expeditious handling of all expenses relevant to a household or a business. Managing expenditures occurs within the framework of a budget that sets limits on the total amount that may be spent for various budgetary line items within a defined period of time, like a calendar month. Engaging in the task of expenditure management typically involves the need to evaluate each purchase closely in terms of the benefit received for the amount spent, while still making sure to not go over the budget in any particular area.

The process of expenditure management begins by reviewing the budgeting habits of the household or business. By reviewing the overall structure of the budget and making sure that the total amount of that budget does not exceed projected income for the period, it is possible to make the task of managing expenditures relatively simple. If the expenditures do not exceed the amount allocated to each budget line item, and those collective amounts do not exceed the total income for the period, then expenses are at least being managed with some degree of efficiency.

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Typically, expenditure management will go beyond simply making sure that the business or household stays within the budget. While doing so is considered acceptable, managing expenditures often involves attempting to trim expenses whenever possible. This means determining if there are ways to still enjoy the same level of benefits without exhausting the entire allotment for a given budget item. For example, a household hold may choose to allocate $100 US dollars (USD) per week for food, but take advantage of sales and actually only spend $89 USD in a given week. In this instance, the household manages expenditures in a manner that not only remains within the budget, but creates a surplus that can either be placed in savings or used for some other purpose that is current not included in the budget.

At its best, expenditure management calls for reviewing each transaction for both quality and price, taking care to remain within the budget but still attempting to save money. This often involves comparing prices and quality between different possible purchase options, then going with the one that offers an acceptable level of quality for the lowest cost possible. In addition, ongoing expenses like insurance payments, mortgages, and similar obligations should periodically be reviewed as part of the expenditure management process. Should a homeowner find that it is possible to refinance a mortgage at a lower rate of interest, doing so saves money over the duration of the mortgage while still providing the ultimate benefit of owning a home free and clear. In like manner, periodically comparing costs for auto or health insurance may lead to finding a different provider that offers the same level of coverage and service while charging lower premiums.

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