When it comes to staying financially fit, tracking your expenses is one of the easiest ways to improve your financial wellbeing.
Whether you decide to opt for a budgeting app for your phone, or good old fashioned pen and paper, keeping track of where your money goes can have a huge impact on your ability to save money and avoid debt. So, with that in mind, I’ve decided to share some of the biggest benefits tracking your expenses can have for you!
1. You’ll Uncover Your Own Spending Habits
Are you an impulse spender or a penny pincher? Do you make a lot of inexpensive purchases over the month or save up for one big splurge? Tracking your expenses can help you figure out your spending personality and make smarter buying decisions. Maybe you’ll see that you’re eating out a little too much, or that you’re making way too many online purchases. Information like that can help you not only curb bad spending habits, but also adjust your budget to accommodate them. For example, let’s say you’ve set aside $50 a week for eating out and $80 for fun money. If you see that you’re spending closer to $70 on food and only use around $35 of your fun money, readjusting your allotted amounts can help your budget stay on point.
2. You Can Discourage Bad Spending Behavior
It’s one thing to feel like you’re spending too much money, it’s another thing entirely to see the actually amount. Sometimes, our financial problems aren’t a matter of not prioritizing our spending or making enough, but rather attempting to live outside our means. Tracking your expenses and comparing it to your current cash flow can give you number; hard evidence of your current spending behavior. Seeing that number can go a long way in encouraging yourself to curb your bad purchasing behavior.
3. You’ll Be Able to Budget Better than Before
Tracking your spending is the key to a successful budget. I encourage everyone to keep some sort of monthly budget but they are definitely a must when saving up for large expenses (house, car, wedding, child, etc). Tracking your expenses on a regular basis can assist you in keeping a budget that bests suits you and your particular lifestyle. A good trick when trying to stay inline with your budget is to use cash only. Opting for cash instead of debit will help you to avoid overspending, especially if you only bring a finite amount of cash with you when going on a shopping trip.
4. You’ll Be Able to Avoid Credit or Debit Mistakes
Maybe a store accidentally charged you twice for an item, or you’re a victim of identity theft. By tracking your spending, you can compare what you have personally recorded with your credit card bill and/or bank statement to ensure that everything is accurate. Catching mistakes early on will make it easier to rectify the mistake with the credit card company, bank or vendor.
Most importantly, tracking spending is a simple and easy way to make yourself aware of your money. Keeping your money on your mind is one of the first steps towards maintaining financial wellbeing and ensuring a positive financial future.