We are always surprised to see how easily small purchases add up and yet, we keep wondering why some dreams seem unattainable. The solution lies in tracking our expenses.
Importance and Benefits of Tracking Your Expenses and Spending
Monitoring your expenses throughout the month holds you accountable for your finances in a few key ways.
It helps you stick to your budget
Tracking your expenses is great for combatting mindless spending and it will motivate you to cut back.
It can reveal poor habits.
If you do not track your expenses you will not know areas in your budget that need assessing and trimming. Many of us don’t realize how much money we actually spend until we actually document our expenses.
It helps you achieve your financial goals
By tracking each and every single expense you make, over time you will make sure that your spending aligns with your values.
Tips on Tracking Your Expenses
We are always surprised to see how easily small purchases add up. Tracking your expenses allows you to identify poor spending habits early on, before they turn into a pile of debt.
Make it easier for yourself by using an app so you don’t skip a day or an expense. All that counts is that you record each and every single expense you make. If you are a couple with shared finances, an online app or another expense-tracking method can sync your spending with your spouse’s spending.
Keep going, even when you overspend. Don’t give up and just do better next time. What matters is being consistent as it will take a few months before you get a hold of your finances but tracking your expenses truly is a piece of cake.
Budgeting and Money Management Tips
To stay on top of a budget, make it before the month begins and practice budgeting to zero. This means once you account for everything, there won’t be a single dollar to spare. This method will show you where your money is going and it will give every dollar you earn a purpose.
It you need to trim categories in your budget start with monthly expenses such as your electric supplier to find a more affordable provider whose package is better aligned with your energy usage. Moreover, you can adopt some energy-efficient habits to further reduce your energy bill.
Don’t forget the fun stuff entirely. Even though debt repayment will be among your priorities, knowing you also have a fun part to it like splurging on a SPA visit will motivate you to actually stick to your budget.
Don’t make savings optional. Savings needs to be treated like an obligatory expense to make sure you save a targeted amount each month as opposed to just saving what is left – which often ends up being zero.
Be flexible and kind to yourself as all the planning in the world cannot guarantee that something unexpected won’t happen. As the French say, that is life. So, make sure you add an emergency fund to your budget, even if it implies putting away as little as $30 each month. For the same reason, make sure you are flexible enough to adjust your budget accordingly as no two months are the same. Nothing is set in stone and neither is your budget. Don’t be harsh on yourself as, like every skill, it takes time to be mastered.
Speaking of practice makes perfect, make sure your goals are SMART to keep you going. This means they are specific, measurable, attainable, relevant, and timely, so you can easily keep your eyes on the prize – the reason you are doing all this in the first place.
Takeaway – Tracking your expenses shouldn’t take more than a few minutes each day if you find an approach that works for you. It might be challenging at first but if you consistently track your expenses, you will be able to save more, spend less, and make other necessary changes to your finances that will allow you to build wealth and create the life of your dreams.