At first, tracking your expenses sounds incredibly boring.
Watching every penny that goes in and out of your bank account probably isn’t your idea of a good time. However, the more attention you pay to your money, the more empowered you become.
Dedicating some extra time to tracking your expenses could mean that you achieve your financial goals faster and feel richer overall.
While tracking sounds like a lot of work, to begin with, it’s one of those things that usually gets easier over time. Once you’ve established the right habits to make sure that you’re always aware of your budget, watching your money starts to feel natural.
Here’s why it’s a good idea to track your money.
You’ll Be More Financially Aware
Ultimately, the number one reason to start tracking your expenses is that you’ll be able to achieve financial awareness. A lot of people today go through life spending money almost passively. We use our credit cards and debit cards to buy things that we don’t need, then agonise over a lack of cash at the end of the month.
However, when you’re tracking your money, you create a habit of being aware of exactly how much you spend on everything. This means that you’re less likely to grab a coffee on your way to work and brush it off because you know that every penny has an impact on your finances somewhere down the line.
Becoming financially aware is the first step to true wealth. The less money you waste on things you don’t really want or need, the more cash you can put towards achieving your goals.
You’ll Get the Best deals
Because financially aware people are focused on keeping track of every penny, you’ll also be the person in your group that ends up getting the best deals. You’ll know where to go when you want to find a voucher code for your next shopping spree online, and you’ll never pay more than you need to for a big-ticket item.
The better you get at spotting deals, the easier it will be for you to get everything you want in life without having to take out endless loans or get into unmanageable debt. Even when you take out a loan, your frugal nature will help you get a better deal by ensuring that you compare your options and look at services such as Omacl.co.uk before committing to a specific provider.
You’ll Identify Spending Issues
The more you pay attention to your spending behaviour, the more likely you are to pick up on areas where you might be more likely to go over the top. We all have areas in our financial habits where we’re less disciplined than others. For some people, it’s spending money on weekends out with friends; for others, it’s over-spending on takeaways and fast food when they can’t be bothered to cook.
Knowing where your over-spending triggers will help you set up strategies that will stop you from spending too much in the future. For instance, if you know that you’re constantly ordering food because you don’t have time to make meals at home, you can start creating shopping lists that include meals that are faster and easier to cook. You might even be able to make some meals in advance so that they’re ready and waiting in the freezer when you get home from work.
You’ll Reach Your Goals Faster
When you know where your money goes each month, you’ll be able to see spaces where you can cut down on expenses in certain areas and devote more money to other areas. For instance, if you’re saving up for a deposit on a home and right now, you think it’s going to take you five years to get to where you need to be, you might learn that buying one less takeaway a month could get you to your target one year faster.
Tracking your expenses helps you understand the real value of money and how everything you buy takes you closer to your goals or stops you from moving forward. When you understand exactly how your spending habits affect your life, you might also find that it’s easier to force yourself to stick to your budget.
Make Tracking Easier for Yourself
For some people, the easiest way to track expenses is to make notes with a pen and a piece of paper. Other people prefer something a little more digitally savvy. The good news is that it’s completely up to you. Either take the old-fashioned route or experiment with apps and online software to see whether they can help you track your expenses without getting a headache.
