Photo from Pixabay on www.pexels.com
“You can be young without money, but you can’t be old without it.“ — Tennessee Williams
A friend of mine, let’s name her Bridgette, is a type of person who always gets frustrated during paydays. She said that no matter how hard she budgets, she ends up struggling to survive until the next payday. So instead of getting excited after receiving her paycheck, she’s always disappointed knowing that the cycle of living from paycheck to paycheck will continue.
I asked ‘Bridgette’ where most of her money went and she just gave me a blank stare. She can’t even recognize her own spending patterns. You probably hear the same story from your co-workers or maybe you share the same story as Bridgette. If you find it hard to track your finances, this article is for you.
Why do you need to track expenses?
For you to gain control over your finances, you must first know your spending patterns. Keeping track of your expenses is the first step to understanding how you manage your money. If you’re struggling with finances right now, you better revisit this crucial step as it gives you more awareness with your current financial situation.
Though it requires some effort to record every transaction you made, it also builds up financial discipline and makes you mindful of how you actually spend. Unfortunately, this is one of the most important financial habits most people overlook with more people typically spending way too much time (and attention) on investments since it sounds ‘sexy’ or esoteric. In fact, investing should be seen as the ‘icing on top’ with savings as your building block – but that’s a topic for a different post. I digress.
HOW TO TRACK?
Classic pen and paper method may sound ‘old school’, but some people are still using this approach. One of the biggest advantages of documenting expenses with paper is the physical and mental awareness writing creates. Still, the downside is pretty much obvious. Keeping those physical records and analyzing trends can be challenging without spreadsheets.
It can get tedious, but there are tons of apps nowadays, so it’s no longer as tiresome as pen and paper. And here are just few of the helpful expense tracker apps you can use:
1. Money Manager Expense & Budget– I personally use this app because of the simplicity of its interface. You can input both your income and expenses and the app will automatically give the analytics of your spending habits in any given period. One of the best features is storing your data for backup and restoration.
2. Money Lover: Money Manager, Budget Expense Tracker – What separates this app from the rest is its ability to forecast your future spending based on your historical expense patterns. It also reminds you the bills with their respective due dates to make sure you won’t miss important payments.
3. Wallet – Finance Tracker and Budget Planner – This app isn’t just a spending and expense tracker, but is also a budgeting and a bill reminder. One of the unique features this app offers is its ability to calculate your emotional index based on how you judge whether it is a worthy purchase or not. It also sends reminders occasionally for you not to forget recording your expenses.
There are a multitude of expense tracker apps out there. Feel free to explore the one that really fit your needs.
How tracking expenses leads to budgeting
Once you know your spending patterns and distinguish your fixed and variable expenses, you can already make some adjustments and set priorities. It will also give you an idea on what type of expenses you can cut to allow more room for savings and investments. Knowing these things are necessary for you to come up with a budget that is realistic and reasonable.
Making a budget, however, does not end up with having one. You should also monitor your expenses regularly to assess whether you’ve hit your target or not. From there, you can make other adjustments to establish a more effective budget.
CONCLUSION
Tracking expenses is like keeping a journal. But instead of telling how your day went, you are telling how you behaved financially. Whether you’re just curious about your spending patterns or just trying to stay on budget, tracking expenses is not an optional activity, but a habit you should exercise. It’s in those little habits that creates a huge impact, giving you a greater sense of control in your financial life.
By the way dear reader, we’re planning to set up a Financial Journey Workshop soon. If you join up, you’ll learn the ins-and-outs of planning for your Financial Journey from goal setting to planning out your portfolio and even to passing on things to your loved ones.
If you’re interested, send us a message at our Facebook page or email me at andre@palawandailynews.com.
Disclaimer: Just a reminder, dear reader, that the content in this column is my opinion only and should not be construed as investment advice because I am not your financial adviser, neither did I take into consideration your personal objectives, financial situation, needs or circumstances as your fiduciary. Above mentioned mobile applications should be accessed at your own risk. This column is not advertised or endorsed by the developers of the said mobile applications. It is mainly for your entertainment and education only.