4 reasons to track your spending
Do you have a family budget? If so, pat yourself on the back. You’re ahead of many families who don’t. But a budget is only one side of the equation. You won’t know if you’re staying on budget unless you track your spending. Tracking your spending is easier than ever these days. There are so many ways to do it: phone apps, spreadsheets and some credit card statements even group your spending into categories to make it as painless as possible.
Still not convinced? Here are four reasons to track your spending.
1. Reach your financial goals
It’s hard to reach your financial goals if you don’t know where your money is going on a daily basis. By tracking your spending, you can make sure you’re staying on budget and not overspending in certain categories. By staying on budget, it will help you stay on track for meeting both your short- and long-term financial goals, such as saving for a car, vacation or an early retirement.
2. Limit impulse purchases
Spending $5 and $10 here and there on coffee and lunch may not seem like very much, but that spending can really add up over time. If you spend $5 on coffee and $10 on lunch every single day (even weekends), in a 30-day month you’ve spent $450 at the end of the month – almost the equivalent of a week’s paycheque.
I’m not saying you should never treat yourself, but by watching your spending more closely, the savings can really add up. If you only went out for coffee three times a week and twice a week for lunch, you’d only be spending $140 per month. That’s $310 more you’d be saving by brown-bagging your lunch and brewing your coffee in the office the other days. Who ever said being frugal never paid off?
3. See how you’re spending your money
Tracking your spending gives you the big picture of how you’re spending your money. You may only dine out three times a week, but all those meals out could be costing you more than you’re spending in groceries at the end of the month. Likewise, you may be spending $120 a month on cable, but if you’re only watching four hours of TV a week, is it really worth it? You may be better downgrading to basic cable or cutting the cord and just going with Netflix instead. Tracking your spending makes you question it, and look for greater value.
4. Discover fraud and identity theft
It’s easier than ever to check your credit card balance. Use your bank’s website or mobile app. By getting in the habit of regularly checking your balance, not only can you keep tabs on your spending, you can also spot fraud and identity theft.
With a lot of people opting for paperless billing instead of snail mail, it’s easy to just pay your credit card balance without a second thought. But by reviewing your purchases on a weekly basis, you can flag any suspicious charges and let your credit card issuer know right away before too much damage is done.