Adulting 101: Track your Expenses
Last week, we have talked about setting financial goals and what things to consider when doing it. Today, I want to tackle about how tracking your expenses can help you achieve the goals you have set at the start of your adulting journey.
But first, I will say a disclaimer. I am not a licensed or professional financial advisor. I am merely sharing the things that I have learned from my own research. I advise that you take what I write with a grain of salt and do your own research as well.
With that friendly reminder out of the way, let us get started. This article will be divided into two parts.
How do you track your expenses?
Why is it important?
How do you track your expenses?
Most likely, you already have an idea about what I mean with what I wrote. Tracking your expenses involves being aware of where every cent goes. In achieving financial freedom, every cent matters so you have to consider where it goes.
Let us have a uniform definition of what I mean by expenses in this article. Expenses are the things where we put our money. It may either be for wants or needs, recurring or non-recurring, and fixed expenses. As long as the money is going out of your wallet, then consider that as an expense.
The first way to do this is by writing down where you spend your money. You can do this in a small or big notebook. First, write down the date of where the purchase took place. Then include the reason for why you spent this day. Most importantly, jot down the amount of money that you spent down to the centavo.
This is a time consuming way to track your expenses. Moreover, it will require more effort on your part to do. You would have to have your pen and notebooks ready as well as a calculator for when you need the total amount of your expenses.
If you are lazy like me, you will surely benefit with another way of expense tracking. Setting up your own spreadsheet will be tume consuming at first but it will save you time in the long term.
By setting up a mainly automated process woth the power of spreadsheet, all you would hsve to do next time is to input all the expenses that you have and the sheet will do the work for you.
Well, that is if you know how to maximize the potential of spreadsheet. It is intimidating at first, but trust me it is a fun process. I do not know everything there is to know about using spreadsheet but I know enough that I managed to do my own expense tracker.
I might do an article about it next week so if you are interested, be sure to look out for it.
Now that we have discussed the ways in how you can track your expenses, let us talk about its significance.
Why is it important?
Do you really have to track your expenses?
Actually, you don't have to...
If you do not care about money at all.
But if you do, then you must be vigilant where you put your money. This way, you can see how you can achieve your goals.
By tracking your expenses you will mot be able to pretend that your impulse buys just take up a tiny amount of your budget. You will be able to see where you put most of your money.
Not only that but you can also see if you are spending within your means or if you are stretching your money too thin that you end up having more debts than savings.
While it may sound silly, being able to see where every cent you have goes will put your mind at rest. You will no longer have moments where you ask yourself, "where did my money go?" because all you have to do is to check your expense tracker and you will see where you put your money.
This small change in your routine will make you more mindful of where you want to out your money so you will be able to resist unneccessary spending money.
Closing words
I really wanted to write this article as I used to hate tracking my expenses. I used to have the mindset that money is meant to be used so why would I bother where it goes. well, that was until I started handling more amount of money and soon I did not know where the P40,000 I had went. No matter how hard I tried to add up all the things that I can remember buying or spending for, it does not match the money that I should still have.
At that moment, I realized the importance of tracking where my money went because I can not just rely on my memory. I started tracking my large expenses first because I thought it would suffice. I had a small notebook where I list down where I use P100 and up. But as time passed by, I started to notice how the little change I have adds up so then I also strated tracking it. Right now, I am using a spreadsheet to track my expenses as it is more convenient than just writing them on a notebook.
I wrote this article in hopes that there will be younger people than me who might read this and really think about setting up their own expense tracker. This is because I believe that you will be able to appreciate the money you have right now when you have little financial obligations than when you are making more money but also handling more financial obligations. Trust me, I miss the times where the money I receive immediately goes into impulsively buying things. Now I have to bidget how much I should give to my parents as well as give my share for the bills we pay monthly.
Anyway, I wish that you enjoyed reading this article. This is all that I want to say today.
This is a part of the Adulting 101 series that I am writing. You can read the earlier articles of this series here:
Thank you for reading this article!
If you want to read some more articles of mine, I have monthly summaries here:
December 2021 Articles Summary
November 2021 Articles Summary
I think there are apps available that we can download to help in tracking expenses. I haven't tried though.