Tracking your finances is basically the holy grail of adulthood. You simply won’t appreciate the true value of managing your finances until you start getting financial amnesia. You could’ve sworn that you had $200 in a pocket, somewhere, and then spend the next two hours backtracking every single step you’ve taken; only to find out that you spent it on the most random shopping spree recorded in modern history. Unfortunately, the learning curve for managing your finances, efficiently, is a bit unforgiving, as most people will think about it only when they find themselves drowning in bills and interest rates. You could be doing a lot of things that are draining your income, without being aware, since you’re not tracking your finances. The good news is that technology is simplifying the ability of keeping a close eye on your finances. We’ll be discussing the importance of keeping track of your finances to save you a lot of headaches, in the long run.
Monitor Money Flow
It’s important to understand how you are spending your money. How are you supposed to know whether your grocery trip, phone bills, or any other expenses are sensible or not, if you don’t keep track of them? Having an understanding of your expenses is going to help you discover more about your money flow. This won’t only provide you with the ability to save money, but it will also help you in cutting down on unnecessary expenses that end up being financially drained.
Prioritize Your Expenses
When you’re tracking your finances, you’ll be able to see discrepancies in your spending. Not all expenses are the same; rent is usually at the top of the priority list, while a Wagyu steak dinner is not a necessity. Essentials like clothes, food, entertainment, and even outstanding loans can start piling up, if you don’t set a budget, for each, according to your current priorities. As stated in Loanski.co.uk, it’s very easy to obtain a loan, but the inability to pay these outstanding loans, on time, can get you in serious trouble. You don’t want to fail, paying back your debt, just because you decided that new rims on your wheel would make your car look cooler.
Financial Understanding Between Couples
In a world dominated by money, it’s no surprise that one of the most stressing elements, on relationships, is money, or to be more accurate, the lack of it. You and your partner probably have different spending habits with different priorities. Taking some time to discuss each other’s financial priorities and tracking both your finances will help you reduce the friction caused by stressful financial situations. You don’t have to put each other’s spending under a burning spotlight, instead, work together to figure out a way to make your lives easier.
Impulsive shopping is a major problem that creates a financial burden. It’s not bad to make an impulsive purchase, every now and then, to satisfy some of your innate needs, but making a habit out of it can leave you in rags. When you track your purchases, you’ll be able to know what exactly makes you purchase something on impulse and how much you spend. The problem is that most of these purchases are made unconsciously, which leaves you with a vague memory of what you were thinking about, when you made this unnecessary purchase. The constant feeling of guilt can become very stressful. That is the reason behind the importance of financial tracking.
Healthy Relationship with Money
A lot of people have an unhealthy relationship with money; this makes the mere discussion of the topic with them uncomfortable. According to recent surveys, the majority of Americans are bearing the damage caused by stressing about money. Tracking your finances will help you avoid the constant worry about bills. Financial security will allow you to start focusing on long-term interests that will benefit you.
If you’re not monitoring your bank statement and credit card purchases, you could be getting overcharged or paying for fraudulent charges. There is nothing worse than losing your money to shady practices, because you weren’t paying enough attention to your account statements. Online purchases can sometimes be riddled with technical errors that end up double-charging you. You’ll want to keep your eyes open to make sure your money doesn’t get siphoned away unnecessarily.
Your money is too precious to be wasted on unnecessary expenses and purchases. There is no one-size-fit-all method to track your finances. You’ll want to track your spending habits and situation to create the most suitable plan for you.