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Financial Benefits to Tracking Your Spending
Are you trying to get a better handle on your finances? Are you clueless at the end of each month as to where your money went? Are you trying to stretch your hard earned money a little bit farther? Tracking your spending each month will help you reach all your goals and give you peace of mind.
Having a plan for your money is all well and good, but if you don't know where it actually went to a budget isn't doing you much good. I know that many pay periods I make a detailed budget and have big plans. Then life happens and the plan flies out the window and suddenly the paycheck is gone and I don't know where it went to. If I can at least know after the fact where the money was spent, then I can plan better for the future. For example, my kids all started school this year and there have been numerous miscellanious expenses that I had no idea were coming. Keeping track of these expenses will help me plan better for next year.
Have you ever heard the saying "small leaks sink big ships"? All of those small expenses really add up. My husband is normally pretty good with money and rarely spends it. But if I give him a $20 bill so that he has cash on hand, it will be gone in just a few days on who knows what. Keeping track of where all your cash goes will help you gain control of your finances.
Tracking your spending isn't all that hard, you just have to remember to do it each day. At the very least save all receipts and once a week write everything down. You can categorize it however you want to, but make sure you write everything down so that you will have an accurate picture of your finances. At the end of the month you will see exactly where your money went. You might not realize how those checkout line magazine purchases really add up until you see the total at the end of the month.
So what do you do if you find out you spend $75 a month on coffee or $400 a month on clothing? Well, that is up to you. I am not here to tell you that you aren't allowed to spend that much money on coffee. But now that you have the facts in front of you, you can decide if where your money is going is where you want it to go. Maybe you are OK with spending $400 a month on clothing and would like to cut out the coffee purchases to better afford the clothing. Knowing where your money is going will help you control your finances however you want to control them.
Tracking your spending is not just for everything. I don't track all my spending all the time, I am just not that organized. But if I feel like spending is getting out of control I will start tracking. If I want more information about how I am spending then I will start tracking where my money is going. Sometimes I just track certain categories. For instance this year I am writing down all my clothing purchases to get an accurate amount of what I spend to clothe a family of six. Sometimes I will just track my groceries - by category. This has been very eye opening. I will keep track of things like meat, dairy, produce, canned foods, desserts, drinks, etc. This gives me a good idea of areas I need to cut to help my money go farther.
Tracking where your money goes is one of the best things you can do for your finances. It will give you a control that you never thought possible. Making a plan is great too, but actually finding out where the money went after the plan was made can be very eye opening. Good luck!