Do you track your expenses? For most people it sounds like a very boring and tedious task to track every transaction they do and hence, they end up not tracking their expenses.
If you ask such people if they know how much they spent on groceries in the last 1 year, they will end up giving some vague answers by saying that I spend, say ₹10,000 on groceries each month, so in the past 1 year I would have spent around ₹1.2 lakhs on groceries. Well, if managing finances was that simple then everyone would have managed to create a perfect budget by now.
If you are not aware of where your money is going, you must start tracking your expenses today. It will not only help you in becoming aware, but it has other benefits too, as listed below.
1. Know where your money goes
In this era of online shopping, it is easier than ever to spend mindlessly. Most of us are only living with a vague idea of where our money goes. But if you just spend a few minutes each day to log your transactions, you will be able to see the real picture.
It will enable you to see where your money is actually going. It will allow you to track on which things you’re spending the most and the least, it can also provide you the spending trends which will give you get a better analysis of your spending habits.
2. Identify problem areas
As you keep a track of your expenses, you’ll get a better idea of where you are spending too much. You’ll be able to identify the wasteful spending that you do and in the long run it will help you in becoming a person who will question himself about the spending decisions before handing his credit card for the payment.
3. Make better budgets
Most people start creating a budget without even noticing their spending habits. In such cases, people end up creating unrealistic budgets for themselves and then when they couldn’t stick to it, they feel stressed and they end up feeling that budgeting is unreal.
Well, to create a realistic budget you first need to know your spending habits, and only then you can make a smart and sustainable budget by making small cuts in desirable areas. You will be far more likely to stick to a budget if you create it while taking your current habits into account.
4. Prioritize your expenses
If you track your expenses and see where your money is going, you will be able to prioritize your expenses. Because then you will be sure about what is more important to you : financial freedom, saving money for your new car, or buying that cool pair of shoes which you like.
5. Reduce impulse spending
What is impulsive buying? Impulsive buying is the tendency of a person to buy something without planning in advance. When you take such buying decisions at the spur of the moment, it is usually triggered by emotions and feelings.
But when you keep a track of your expenses, your financial well-being becomes a priority and a much bigger focus for you. So, when you are about to buy something, you will pause for a moment to think what consequences it might have on your overall financial picture. And this pause will reduce your impulsive spending.
6. Find ways to save more money
The best part of tracking your expenses is that you will be able to figure out the wasteful expenses which you do, and you can eliminate them. Many times it happens that when a person starts tracking his expenses, he discovers few areas on which he was spending without even noticing. Finding such areas and eliminating them can increase your overall savings.
7. Track your financial progress more accurately
Financial goals are crucial, and when you track expenses it’s much easier to set accurate goals. For example, you are planning to go on a vacation in 6 months and you set up a goal to save ₹60 thousand for this vacation. Now, if you track your expenses you can easily see how close or far away from your goal you really are and then you can accurately measure your progress to ensure that you reach your goal.
8. Plan your financial future
Now, once you start tracking your expenses, you start to know where your money goes, you identify the problem areas and you eliminate them, you curb down your impulsive spending and hence you start saving more money thant you used to do earlier.
So now, what to do with this money? It shouldn’t be just parked inside your savings account or Fixed Deposits. You need to start seeing ways to grow this money, and when you think about it and learn more about this, you will end up planning better and creating wealth in the long term.
You can check out our articles on how to create wealth and the power of compounding.
9. Prevent potential crisis
Emergencies don’t knock on the door before coming in. These adverse situations are immensely uncertain, and this unpredictability makes it essential for you to be prepared for them beforehand.
Tracking your expenses will enable you to see how much surplus cash you have for these emergencies. To learn more about how to be prepared for such situations, you can refer to this article.
10. Stop stressing about money
Ignorance in personal finance is anything but bliss. We have all seen those people who don’t care about their spending habits and they throw their every purchase on a different credit card. And when the time comes to pay for the credit card bills, then they suddenly feel stressed.
Now, when you are keeping a track of your finances you won’t feel stressed about money. You will be having a clear idea about your spending capabilities, you will have a clear picture of your monthly budget and you will be assured that one accident or emergency will not put you off your finances.
Get started today
Now, as you have gone through some of the benefits of tracking your expenses, it’s time to start tracking yours now. Get started with the Expenses Manager today. Log your transactions, get insightful analysis, and future predictions based on your current spending trends to create informed in-app budgets and all of this without ever exposing your financial data.
Download Expenses Manager.
