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Do You Track Your Spending?

Do You Track Your Spending?

Should one track their expenses?

It is very important to track your expenses. Tracking your spending can be done manually by writing down every purchase you make. Or you can use various apps which are available in this digital age.

The main reason you should track your expenses is to identify and eliminate wasteful spending habits in your financial life. Moreover, consistently tracking your expenses will help you maintain control of your finances, and promote better financial habits like saving and investing. It's an essential activity that you should ideally do every day throughout the month. Tracking your expenses helps you become more aware of what you are spending and where you are spending it. Tracking your spending is the only way to find out how much you’re spending on non-essentials. It can help you identify the areas where you need to change.

Benefits of tracking your expenses

1)      You will spend mindfully

When you write down every expense it helps you spend more mindfully and prevents you from splurging. It makes you responsible with your spending.

2)      Making financial control

When you track your expenses, you take complete control over your finances. At any one time, you will know exactly how much money is sitting in your bank account, and how much you can spend.

3)      Identify problem areas

As you track your spending over time, you'll get a better idea of what's happening with your cash. Many of your daily expenses may seem really, but once you add up everything you spend on dining out, coffee, lottery tickets, or whatever your indulgence is, you may be shocked to find out how much your habits actually cost. 

4)      Make a better budget

By tracking your expenses it will help you make clear budgets for your monthly spends. After you set up a budget, which is a monthly plan for spending that takes into account your income and expenses, tracking expenses daily is essential to keeping you on that budget

5)      Tracking your financial progress

Tracking your expenses on a day-to-day basis helps you to see your progress on the road to your financial goals.

Tracking your expenses on a day-to-day basis helps you to see your progress on the road to your financial goals.

6)      Keeping finances organized

Disorganized finances lead to financial problems. It is easier to stay organized than it is to organize a messy financial situation. 

7)      Improving financial security

It helps you track your bank accounts. What if somebody steals your debit card information and starts spending your money? If you have a track on your spends you avoid these risks.

8)      Encourages and increases savings

When you track your expenses you are likely to find wasteful expenses you can eliminate. This will help you encourage and increase your savings. By eliminating wasteful expenses it opens up the opportunity to redirect that money into savings.

9)      Avoids debt

Tracking your expenses can be a powerful motivator to steer clear of debt. When you are in debt, and not tracking your day-to-day expenses, it’s easy to let the amount of debt you are paying each month slip through the cracks, unnoticed. But, once you start tracking every dollar that leaves your bank account, you will start to add up the debt payments, and it can be eye-opening.

Steps for Tracking Your Monthly Expenses

  1. First: Analyze your spending habits. The first step to keeping track of your expenses, is to figure out what they are. ...
  2. Decide on a budget for each Expense. ...
  3. Set up your Expenses. ...
  4. Fund your Expenses. ...
  5. Spend from your Expenses. ...
  6. Stay on track. ...
  7. Review and adjust your Expenses. ...
  8. Decide what to do with leftovers.