The path to financial security starts with tracking your spending. Sure, it may sound like a tedious task; however, it’s an essential part of taking control of your finances. Tracking helps you become more aware of your spending habits so you can improve them, if necessary.
- You’ll always know where your money is going. Most people are unsure of where their money is going at one time or another. Keeping track of what and where you spend allows you to think twice about spending money, especially on impulse purchases.
- It’ll help you create a comprehensive spending plan. If you want to save more money, but aren’t sure where to make cuts, track your spending for a month. Once you know what you’re spending your money on, you can budget easier and reduce any non-essential spending.
- It’ll hold you accountable to your spending plan. Tracking your expenses keeps your overall budget and financial goals in the forefront of your mind. Since you have to note the expense, either on paper or digitally, you’ll be more conscious of what you can spend.
- You’ll be able to save more money toward your financial goals. Once you know where your money is going and have created a budget, you can identify and save more money toward your financial dreams, including a down payment, new car or your retirement. If you are under budget for the month in one area, you can transfer your savings into the account associated with your savings goals.
- You may become more conscious about tracking your progress in other areas of your life. A funny thing happens when you begin tracking your finances—the consciousness you’re developing about your spending can trickle into other areas of your life, such as your health. The willpower you hone as you resist monetary splurging may also help you resist indulging in an extra cupcake at work or skipping your workout.