Benefits of tracking your spending
Taking charge of your personal finances requires more than just counting how much money is left at the end of the month. It requires effort and consistency. Tracking your spending is one of the ways that you can start to manage your finances. There are many benefits of tracking your spending in order to keep your personal finances in order.
When most people are asked to improve their financial status they are also asked a series of different questions that have to do with forming a budget. Some of those questions might be how much of their salary do they spend on gas? How much do they spend on gifts, food, bills, etc? Some people may guess at what the answers will be and realize they are somewhat close, but most will actually have no idea. Without proper budgeting skills and analysis of your own spending there is no way to get your personal finances into any order. You have to have a sense of how much money you are making in relation to how much you are spending and what you're spending it on. If the unknown is not reason enough for you to start tracking your spending then here are some other benefits to keeping track of your money.
1. Saving vs. Debt- One of the biggest advantages to tracking your spending is that you will soon be able to tell whether or not you are saving any money at all or just putting yourself further into debt. If you have more than just a checking and savings account with your bank then this may be a little harder to keep track of. If you can, try to consolidate your accounts into as few as possible. Budget your money out for the beginning of the month and see how much you have to work with. Then go through your month as you normally would and see where you're getting hit the hardest. If by the end of the month you have nothing to show then you're definitely not helping yourself. And worse if you have had to pull money from your savings or another account, or use your credit card to pay for things then you're accruing more debt than you should. And lastly, if you have not put any of that money you made at the beginning of the month into some sort of savings account you can conclude that you are working your way into debt and saving nothing. This should be your first wake up call and it might be a good idea to either get an accountant to help you get your finances in order, or work on some self discipline.
2. Expenses and spending- Tracking your spending can really help you cut back on how much money you spent every month. Keeping track of your spending each month can also help you spend more consciously and waste less of your money. You'd be surprised at how much money is wasted on eating out and little things that you don't really need. Changing your spending habits becomes a result of tracking the money you spend as you begin to realize that instead of spending $50 on going to a football game or going out to dinner, you could spend less than half of that by just watching the game on TV or by cooking something at home.
So if tracking you're spending really works then how exactly can it be done? Well, there are several different ways to track the money you are spending:
Do it yourself- There's no shame in budgeting and keeping track of your money without any help. It actually teaches you how to be more responsible with where your money is going and you don't feel like anyone else is telling what and where to spend your money. Keep your receipts and give yourself a set amount of money for everything; that's right I said everything. That way when the money runs out, it's just gone.
Accountants- There are definitely benefits to having a personal accountant. The most important being that they will definitely help you save some money and finally get yourself ahead financially which can help for large purchases or investments as you get older.
Software- There are software programs like money quicken that can help with your budgeting habits. They will actually compute and make it easier to track where the money is going so there is no guess work for you.
These are just a few benefits of tracking your spending; direct benefits that you can see. There are several indirect benefits like the security of your future that are also benefits of tracking the money you spend. If you want to have money left in your bank accounts for retirement and security then its' time to start taking charge of your finances and tracking your spending.