Reviewing our expenses tends to be something that many households overlook – instead opting to check the balance total of their accounts and move on.
However, spending those extra few minutes analysing your outgoings can have a significant impact on your finances. While you don’t need a finance degree, a good level of financial knowledge is key to understanding your transactions. Whether you simply scroll through your statement or use a budgeting app, even the smallest bit of financial awareness can go a long way towards your future goals.
In this article, we explore some of the short and long-term benefits of regularly tracking your expenses.
5 benefits of tracking your expenses
1. Planning for the future
If you don’t know your upcoming outgoings, it can be difficult to make plans. You might find yourself unprepared for large expenses, and any you face can become a significant financial burden. To avoid using credit options when big payments are due, it’s best to create a financial plan ahead of time.
If you know when your payments are due, you can make sure to set aside small amounts of money in the run-up to them. This can be helpful when it comes to significant recurring expenses, like loan or car insurance payments. With this knowledge it becomes easier to make small purchases mindfully, ensuring that any non-essentials are within your budget.
2. Spend without worry
When you do choose to make a larger purchase, it can be reassuring to know that you can comfortably afford to do so. Many of us will second-guess ourselves and question whether they’re sensible, or worry about the potential impact on our finances.
If you spend those few extra minutes tracking your expenses, you can quickly figure out what you can afford to spend. Then, when you find you want to buy something new, you can do so without concern or guilt.
3. Reminders to cancel unused services
Most of us have countless online subscriptions and regular payments for services. These can be convenient in some instances, but problematic if we forget to cancel those we don’t need. Particularly if it’s a smaller payment, it could easily be missed if you’re not tracking your expenses in detail.
It’s important to regularly monitor your account transactions to keep an eye out for payments like this. After all, the costs can quickly add up over time. Fortunately, such financial burdens can easily be identified and eliminated when you’re tracking expenses, saving you significant amounts of money in the long run.
4. Establish achievable goals
Saving money is an almost universal struggle, particularly in times when the cost of living has soared. If you’re in a position to set some money aside, it might seem like an insignificant amount compared with the goals you’ve set. Some of the most common goals are particularly ambitious ones, such as a house deposit or new car fund. These take a lot of money and time to achieve, which will feel frustrating for most people.
Instead of feeling disheartened, take some time to review your expenses and determine some short-term goals. Having these realistic and achievable aims can make the process of setting money aside feel much more rewarding. Plus, once you’ve met one or two, you’re more likely to stay motivated in saving for your future.
Related: How to set successful savings goals
5. Awareness of your spending
Little purchases here and there might not seem very significant, but the money can add up over time. By regularly tracking your expenses, you can get a better idea of how these small purchases impact your finances. This can be really helpful when it comes to making more mindful, informed decisions in the future. For example, most of us wouldn’t think twice about buying a coffee on our way to work. However, if this becomes an everyday habit, the long-term cost can be more significant than we realise.
Conclusion: The importance of tracking your spending
Regularly tracking your expenses can have immense benefits, allowing you to make smart purchasing decisions, budget effectively and save money. Ultimately, reviewing your expenses may be key to living a life free of financial burden and worry.