Expenses › Reading your expenses

Reading your expenses: a 15-minute monthly check

An expense book is only useful if you look at it. Fifteen minutes at the start of each month, with the table of types against months, shows where money is leaking long before it shows in the bank balance.

Step 1: total and biggest

Look at the year total, this month and the biggest expense at the top of the expense book. For most shops the biggest are salaries, rent and transport. If something unexpected is near the top, look at its lines.

Step 2: compare months

Read each row from left to right. A cost that is flat (rent) is fine. A cost that climbs every month without your sales climbing is the one to question: transport going from ₹6,000 to ₹11,000 in three months may mean more small deliveries that could be combined.

Step 3: fixed and variable

• Fixed costs are paid whatever you sell: rent, salaries, internet, loan interest.
• Variable costs move with sales: transport, packing, commission, card and UPI charges.

Add up the fixed costs for a month. That is the amount your gross profit must cover before the business earns anything. If your margin on sales is 20% and fixed costs are ₹50,000 a month, you need sales of about ₹2,50,000 a month just to break even.

Step 4: set a limit for next month

Pick one or two variable costs and set a limit for next month: "Transport not more than ₹8,000", "Repairs only when needed, quote first". Check the same row next month.

A worked example

Rent and salaries are steady. Electricity falls as summer ends. Transport has nearly doubled in two months: that is the line to look into.

Keep it honest

The table is only as good as what goes in. Write cash expenses the same day, put personal spending (home groceries, family trips) outside the business book, and use "Not paid yet" for bills you will pay later, so each month shows its real cost.