The importance of keeping track of your spending
Keeping track of what we spend requires management of detail. If you've never tracked what you spend your money on, you may be suprised not only by the results of your tracking but the amount of discipline it takes to make use of your spending information for budgeting purposes.
Why should we track our spending? Recognizing spending habits and trends is an important step in making the best use of money we must budget for our own and our family's needs and desires. Most of us have a limited income with which to pay bills and purchase necessities. The remainder can be spent on the things that make our lives pleasurable. Entertainment activities and special purchases round out our average spending but we may also want to save for the future. Saving for retirement, better living or the proverbial rainy day can be a difficult exercise for most.
If your goal is to structure a budget, the reasons for tracking spending are obvious. A viable budget is impossible to accomplish if you are not aware of where your money is going. The level and variety of spending habits within families can make budgeting particularly important, especially when many family expenses such as telephone bills, groceries and car insurance are sometimes created or multipled by family members who do not share in their payment. Tracking spending, in and of itself can make family members more cognizant of wasteful spending and assist in teaching the younger set the value of a dollar.
Controlling spending is the most likely motivation for tracking spending. Getting a firm handle on where our money goes can help us make wiser spending decisions so that we have more money left over for savings or items and activities to enhance our lives. More effective budgeting can allow us to buy a nicer vehicle, take a more luxurious vacation or gain a better education. Impulse spending on small items or activities can eventually cause us to "nickel and dime ourselves to death" over time.
If our spending exceeds our income, tracking spending is all the more important. Overdrawing our bank accounts or using our credit cards to excess can do irreparable damage to our income and make indelible marks on our credit. It is particularly important for couples and families to communicate about financial matters to insure that wasting money by paying overdraft fees or excess interest will not destroy the family's financial future. Families must work together to track their spending for the good of everyone involved.
Keeping track of our spending habits over time can allow us to see trends in our spending. Determining the causes of increased or decreased expensing on particular things can help us determine where our budget has gone awry and potentially make needed corrections to our habits, like shopping around for better pricing. Spotting spending trends can force our hand when it comes to getting better insurance rates, researching the best grocery shopping venue or switching to the most reasonable cell phone service provider.
The value of tracking our spending and taking steps to budget our money to best advantage cannot be overestimated.