5 Ways to track your expenses

When it comes to finance management, a lot of people are careless about it. This is why the majority of such a class of people cannot tell a good story of how their income was utilized.

Proper tracking of finance and funds gives you a clearer and better account of your spending habits.

Financial tracking, otherwise known as expense tracking, is the process of keeping tabs on your income and spending, ideally on a daily basis. It's achieved by recording receipts, invoices, and business expenses into some form of accounting ledger...says www.business.com

One of the major reasons why a lot of individuals earn a lot but have little to account for is because they do not have a proper finance tracking habit.

Know how you spend your money, and what you spend it for. This habit will help you prioritize and reprioritize your needs and demands.

Annamaria Lusardi, the Denit Trust chair of economics and accountancy at the George Washington University School of Business, recommends getting a sense of your monthly cash flow — what’s coming in and what’s going out.

Have proper financial discipline so that money will obey you. There is an old myth that says ' if you build a house for wealth, it will come in and dwell". This myth is true today, and it starts with proper personal financial management and accounting which extends to financial tracking.

The steps below tell you how to go about Finance tracking;

1. Create a journal

Whenever I talk to people about the various ways to track their Finance, I always make this the first on the list.

Creating a journal is one of the most effective ways to track your finances. This is done by taking a manual record of your daily incomes and expenditures. Doing this leaves you with the consciousness of how your money comes in and is being spent.

It is more effective when you do this daily so that you will know what your daily spending routine looks like and then know if you will have to adjust to it.

If you do not plan your expenditures, it will definitely pull you down.

2. Do a monthly Analysis

Knowing what your daily spending routine looks like, makes it easier for you to have an aggregate of what your expenditures look like in a month. This is why it is important you do this daily so that at the end of the month, you already know how much you have spent in approximately 30days.

Knowing your monthly expenses makes it easier for you to remain on track and also helps you to save an extra income that comes in. It doesn't give room for careless spending as you already know what your monthly expenses should look like hence anything more than that might be considered unwise spending ( not always though as some emergency needs may arise). But this serves as a guide.

3. Categorize your expenses

This one even though it sounds common, is a very effective method of tracking your expenses. When we talk about categorizing expenses, it is not something difficult. It goes by splitting your expenses into "wants and needs". Know what your needs are and your wants too. Be able to differentiate your needs from your wants.

When this is done properly, it becomes easier for you to know where to spend on.

This method helps you to create what we call a "scale of preference" as you will no longer spend randomly but basically on things that you really need.

4. Get a finance tracking app

This is one other way you can do this finance tracking effectively. You can simply go for a finance tracking app.

An expense tracker app is a web or phone-based app that can help you track a range of expenses. You enter income and expenditures, and the app can help you store and track that information.

This app helps you track your budget, track your investments, use graphs and charts to show your progress, and keep your business and personal expenses separate.

This app is ideal for personal finance as it shows you your expenditure history and how you could adjust to that if need be.

5. Savings

This method becomes the best if other methods are not working, this will certainly work. It is simply by creating a fixed deposit account and saving your money there. When a certain amount is saved monthly, it gives a clue on how to use the one left.

When funds become limited, proper management becomes a must-do. Saving your money makes this possible as what you will have left might be small hence the need to manage and prioritize your need.

This method works very well for me and of course for a lot of people out there.