Managing personal finances is crucial for achieving financial goals and maintaining a balanced lifestyle. Monitoring our expense, ensuring that we don’t fall into the trap of overspending on items that, in fact, we may not actually need, can be challenging, but with Python, you can automate the process of categorizing transactions and detecting unusual spending patterns. In this article, I’ll share a script I developed to analyze bank statements (actually credit card statements should be analyzed, it is there where “problem” resides), categorize expenses, and flag anomalies.
The script works by looking at the already downloaded extras in excel format — note that in my example the extension is ‘.xls’ mirroring the real format from my bank (but can be changed to ‘.xlsx’). For this demo, I used 4 files = 4 months of data. It is also a simplified one, meaning it does not have ALL expenses, for the sake of the demo.
It automatically classifies each transaction into predefined categories, such as groceries, entertainment, utilities, etc. (depends on how they show up on your statement), and it compares the current transactions with the previous pattern, and flags any outliers or anomalies that deviate significantly from the normal pattern.
