How to Track Your Expenses
Expense tracking is something I often write about on journeywithmoney. I believe that tracking your expenses helps you gain perspective on your life, so you can determine whether the way you manage your expenses is true to your priorities and what’s important to you.
How to Track Your Expenses (Getting into it)
Tracking your expenses is a pretty simple practice (here’s a Expenses Log that’ll let you track a week). Each day, you jot down how you spent your money. Once you have about a week’s worth of data, you look it over.
In looking over your expenses log, we recommends asking yourself a few things:
- What do you like about your expenses? Make sure you celebrate your wins, and the things you’re doing right already, instead of just picking apart all of the ways that you could do better.
- What do you want to spend more of?
- What do you want to spend less of?
Different people will want to spend on different things. For example, depending on your situation, you may be interested in putting more of your money into:
- Gifts for your family;
- Healthy food choices;
- Learning new things;
- Donating to charity;
- Investing (You could do a REV with the money you have).
You don’t have to make a pie chart and account for everything (we hate that), but you’ll want to look out for whether you’re spending your money intentionally, in ways that are important to you.
Tracking your expenses takes less time and attention than you might think. It takes just a few seconds to jot down what you spent on, and once you settle into the practice, you can update your expense tracking sheet every night, recalling what you just did.
Why You Should Track Your Expenses
There are countless benefits to tracking your expenses. Here are just a few of them:
- You can see how much you actually spend. We tend to underestimate how much we spend by a significant margin. A expense log lets you see, at a glance, how much you truly spend.
- You can separate from the stories you tell yourself. We tend to tell ourselves things such as that we have no money, that we spend very little money on coffee, and that we spend too little on taking care of ourselves. Tracking your expense lets you verify if these stories are actually true.
- You discover what your priorities actually are. It’s one thing to believe that something is important to you; it’s another to invest money in what you consider to be important. Keeping a expense log lets you see how much you’re spending on things you deeply value, and how much you spend on things that are not important
- It makes you feels richer. Much like how keeping a food log leads you to eat less, keeping a expense log lets you bring greater awareness to how you’re spending your money. In practice, this feels great: meaningful expenses like spending money on family feel more meaningful, because you’re able to reflect on their true value.
- A expense log can lead to real change. Noticing that you spend $500 each month just on coffee lead you to probably find a cheaper alternative to a drink. Noticing that you spend just too little on family may lead you to reach out to them more often. Noticing that you have more surplus than you think you do may lead you to be encouraged in your financial journey
There are countless other benefits, but these are a few of my favorites!
In Wealthdojo, we believe in making finances simple. Tracking expenses is the first part in a person’s financial journey. To help you out in your journey, we are running our next seminar series #4: Sandwich Generation: Is it still possible to be rich?. We will touching on Your RDSL (Retirement Destination Shopping List), explaining why budget is USELESS and UNREALISTIC and also finding out how successful people STAY RICH by using the InPORT strategy. Contact us for more details. See you there.