fbpx
Menu

5 Reasons Why You Should Track Your Personal Expenses

5 Reasons Why Track your Expenses Featured Image Peacock bright feathers

Tracking your expenses can be one of the best financial decisions you will ever make.  Yes the simple task of tracking your daily spending can make a significant impact on your financial life.   What’s great is you can get started today and it doesn’t matter if you make $10,000 a year or $10,000 a month.  Once you begin to see where you are spending your money you can decide if your hard earned money is truly going towards what you need and want.  Here are some great benefits to why you should track your expenses.

1.  Tracking your expenses allows you to spend more on what you value most

When I first started tracking my expenses it was shocking.  I was spending so much money on “stuff” that I didn’t really care about.  I had brand new Nike shoes and clothes, but I couldn’t afford to travel more or pay off my debt faster.

Tracking your expenses can be eye opening.

Your spending may be different than mine.  It could be spending hundreds of dollars eating out, living in a fancy apartment that costs you half of your income, or a brand new car sitting in your driveway.  

For me tracking my expenses was important because it allowed me to see what I wasn’t spending money on.  Let me say that again.  That’s right tracking my expenses made me see that I wasn’t spending enough money on what I truly valued.

Justin a friend of mine from Saving Sherpa likes to phrase it another way.

What did you eat last week Tuesday?  Not sure, can’t remember.  OK now tell me about your last vacation?  Your eyes light up and you have story after story of the exciting times you had.  Spend money on what you value most.

Today I spend more money on what I value most.  It’s exciting to focus my time, energy, and money on what matters most to me.  

Spending more on family BBQ’s or celebrations at the house.  Travel to new places to see old friends.  A few more dollars spent at my local gym or organic fruits and vegetables.  These are just a couple of things that I value.

Start tracking your expenses and ask yourself a simple question after 30 days. 

Are you spending money on what you value most?

2.  Tracking your expenses helps you to see overspending before it becomes a large financial problem

As a financial coach one of the biggest issues that I see clients face is overspending.  The age-old wisdom of spending less money than you make is a simple concept, but one that millions of Americans struggle with every day.

Under Greater Financial Pressure Spending and Debt

Numbers don’t lie.  If I ask you how much you spend on groceries or eating out chances are you will give a vague ballpark number if you have never tracked your expenses.  Tracking your expenses can give you a real look at what you actually are spending.

I can’t tell you the number of times I have heard that I don’t spend much or I don’t know how much I spend on X.  Then after 30 days of tracking their expenses they find it’s two (2) or three (3) times more than they could have even imagined.

The reason this is so important is that if you are overspending in one place chances are you overspending in many places.  It’s a domino effect.  Overspending on big ticket items like housing, transportation, and food leads to a higher chance of financial problems.  

If you are overspending on the big items and income is limited we tend to add expenses to our credit cards.  Each month instead of paying off the entire balance, we tend to pay what we can “afford” which increases our debt. 

High interest debt especially revolving debt like a credit card is the hardest to get out of.  

How do we stop the dominoes?

If you track your expenses you can begin to see what areas you are overspending. 

Then you can take a step by step approach to reduce spending in each area.  If you can stop the domino of overspending you can avoid a financial disaster from occurring. 

Why should I track my expenses?  Because tracking your expenses is the beginning of a better financial life.

3.  Expense tracking allows you to create a reasonable budget that fits your income

My biggest spending challenge is my grocery bill, although restaurants certainly make its presence known from time to time.  

It’s something that I work on when I create our family budget.  Since I track our expenses I am able to see how much we spent last month and even last year.  I can see if we are overspending at a certain store, how frequent are grocery visits are, and the average spend each time we go grocery shopping.

Papers with financial software

We track our expenses with the free website and app Personal Capital.  If you sign up using this link, as a bonus we get a $20 Amazon gift card. 

Based on tracking my expenses I then set a reasonable grocery budget for the month.  I can check in after two (2) weeks and see if we are on pace to stay within our budget.  

From there I can either follow the budget that I laid out or course correct and spend a little less for the month to stay within the plan.  

Each month I look back on how well or poorly we did.  I will also look for ways to improve in the month ahead.  While I certainly can afford to spend more money on groceries or other categories it goes back to spending money on what I value.

If I’m saying YES to spending more, what am I saying NO to?

4. Tracking your expenses helps you make more mindful  financial decisions

Each month when you begin tracking your expenses you get the opportunity to look at your past spending and decide how you want your financial future to look.  What a great opportunity!

As you begin tracking your expenses you will see small changes in your habits.  As you add an item into your Amazon cart you might ask yourself if it’s fits into your spending plan.

Instead of spending without consequences you will begin to spend more mindful. 

The “stuff” that you would have normally purchased has become extras.  You see that now because you see each week what you are spending your money on.

Financial stress begins to melt away because you are no longer making impulsive financial decisions.  Instead you are making decisions that become part of your smart financial moves.

Over time tracking your spending will lead to more mindful financial decisions.  

By tracking your spending you will become someone who tracks their expenses and makes smart financial decisions in the moment and when you plan ahead. 

That’s who you are and what tracking your expenses has allowed you to become.

5.  Tracking your expenses makes it much easier to set financial goals and plan ahead

Nike Ben & Jerry's Chunky Dunky Why track your expenses

I like Nike and ice cream, but I did not buy these shoes

When you track your expenses you can see the bigger picture.  It’s not about buying the latest Ben & Jerry Nike shoes or athleisure outfit.  Tracking your expenses is about what you value and care about most.

Paying off debt is a lot easier to do when you know how much you are spending each month.  So is saving for a road trip or vacation to a new place. 

Saving for big ticket items like a house, car, or your emergency fund takes planning.  Tracking your expenses allows you to create a plan to reach those goals.

Investing in yourself with education and training, adding money to your 401K  or investment accounts for medium and long term plans like retirement, or to create a whole new income stream with real estate all takes time, energy, and money to catapult yourself into a better you and a better financial future.

These are all reasons why you should track your expenses, the payoff is enormous.

Ready to take your money to the next level?

Schedule a 20-30 minute phone call to see if working together is the right fit for both you and me.  I want to help everyone, but I only have time for a select few.  You’ll schedule an appointment and select Free Discovery Call.

Once you schedule, you’ll get an email with some questions to fill out about your current money and finances. On the call you can ask questions about coaching and talk about how I might be able to help you with your specific situation.  No pressure to join!

>