5 Reasons to Track Your Spending
How much did you spend last month eating out?
What were your utility bills in December vs July?
Has your cell phone bill been slowly getting bigger?
These are the questions you should know the answers to. I’m not saying you should have a general idea of these financial answers. I am saying you should know the EXACT dollar amounts of each of these. Let me tell you mine:
Eating out in December 2017: $150.45
Utility bills (Electric, Gas, Water, Garbage, Sewage): December 2017-$331.99 July 2017-$527.03
Cell phone bill has stayed the same for years: $72.25 + $72.25 for my wife
Here are five reasons why you should start tracking your spending today.
- You need to be in control
If you don’t know where all your money is going you aren’t in control. You may be paying all your bills just fine & your savings might even be going up but that doesn’t mean you are in total control. Over the course of months or years, it’s hard to identify exactly what your money is doing without seeing & comparing the data month over month.
You need to tell your money where it should go & how much should go there. Once you establish these rules you will make much better financial decisions, your money will begin to work for you, wealth will slowly replace debt & you will feel happier.
- Random charges WILL pop up
Last year I moved from Utah to Texas. I was forced to get new auto insurance. When I switched to a new insurance company they tried to contact my bank since I have a loan on my vehicle & it must be insured at all times. My previous insurer also contacted my bank letting them know they were no longer insuring my vehicle. Due to some miscommunication, my bank thought my vehicle wasn’t insured & they withdrew a fee from my account PLUS they were going to charge me an additional monthly amount for their auto insurance which is ridiculously expensive. If I wasn’t frequently checking my accounts & documenting their activity I would have been out hundreds over the following months.
You may think that kind of stuff is rare but it isn’t. I once filled up gas & the gas station charged my card twice for the exact same amount. I recently upgraded my phone & rather than going to a physical location I did it online because they had a promotion of a “Waved Upgrade Fee” when bought online. They still charged me the upgrade fee. These things happen but are easily fixed with a phone call if you are aware. If you don’t check your accounts you’ll be out the money.
- Your bills will magically increase.
Maybe when you signed up for internet they gave you a “12-month promotional rate” & on the 13 month you’re your bill doubled! Or maybe you called your banker to check on something & then he “accidentally” signed you up for a paid checking account vs the free one you had. Your maybe your car wash subscription mailed you a letter (that you never got) stating that all passes will be going up at the start of the new year.
If you do not know what your bill was 6 months ago it’s hard to know if it’s any higher now.
- You spend more than you think
Even I do this. Before I pulled up the spreadsheet of my December spending I thought to myself, “I can only remember going out to eat once or maybe twice last month so I bet we spent $50 or maybe $75 tops on eating out.” I was WAY off. We spent $150.45, TRIPLE what I thought & I feel like I’m hyper-aware of spending.
- Your spending will forever match your income
If you do not get serious about documenting where your money goes you will continue spending at the same rate as you earn. We tend to think that if we just made little more we’d be financially stable. Then we make that much & once again we say, “well, if I just made a tiny bit more then…” & that cycle forever continues.
The truth is most people make enough now or are on a good path & will make enough in the near future to be financially stable but for the reasons above they won’t become financially stable.
Start keeping track of everything you spend & you will make better financial decisions!
So where, or how, do you keep track of ALL your finances? What program do you use?
I have my own spreadsheet but I am testing out some budgeting apps to see if I can find one I really like. I’ll probably do a review post about the apps I’m trying out.