kick-start your expense tracking habit12/10/2020
It’s tempting to leave new habits for a new year. But if the COVID-19 crisis has left you feeling motivated to get more control over your money, tracking your expenses is a valuable habit to start now.
Tracking and seeing what you spend your money on is a foundation habit that will help make your other goals easier to reach. This is because you'll be able to:
• See whether you’re spending more than you earn
• Know how much you can afford to save, so you can put it away at the start of each month
• Create a realistic budget, and check if you’re sticking to it
• See how small, repeated expenses add up over time (you may be surprised by the amount!), and you’ll know if you’re spending money on anything that isn’t really adding value.
Having insight into your spending will make it easier to decide what habits or expenses you need to change. And being accountable means you're likely to spend without thinking. You may even find money you didn’t know you had! Tracking your spending could also highlight obvious areas where you can cut back, which will allow you to save more, repay debt or spend a little more on the things you really love.
As lockdown restrictions are eased, it's a good time to establish this habit.
What you'll need
Use your banking app, bank statements and receipts to keep records, or consider downloading a tracking app that will gather your spending across different accounts all in one place.
Your banking app or tracking app will help you to divide your spending into different categories (such as ‘food’ and ‘transport’). These categories may be quite broad and can hide a lot of unnecessary spending, so keep your receipts and go through them for a more detailed record of how much you spent on what – for example, essential food, treats, snacks and so on.
For the detailed tracking, you can use a pen and notebook or go digital with an Excel or Google Sheets spreadsheet which will automatically do some of the maths for you.
Be careful of cash purchases and remember to keep cash purchase receipts as you won’t have a record on your bank statement or banking app.
A tracking habit takes commitment because it will take some time to do properly. Decide how often you’re going to update your records, and set a time to do it. Do it weekly if you can, it won’t feel like such a big job, and you’ll know how much you’ve spent throughout the month.
Be realistic and disciplined but stay flexible. Although this habit needs consistency, you can adapt it – revisit and revise your plan, and schedule it differently if necessary.
Even if you only go through your bank statement once a month and work out how much you've spent across a few broad categories, the important thing is to keep doing it. Once you are in the habit of tracking your spending, you can start challenging yourself to find changes you want to make so you can repay debt and build your financial security.
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