Using an Expense Tracker
Many people know how much money they earn, but it can be much more difficult to answer questions about how much you spend in a typical month.
With multiple outgoings, direct debits and the ability to order products and make payments in an instant, many find it tough to keep track of spending.
This is where a personal expenses tracker comes in handy.
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What exactly is a personal expense tracker and do I really need it?
Do you ever find yourself staring at your bank balance on a screen or rifling through paper statements wondering where all your money has gone?
If so, you could benefit from tracking spending and using tools to manage your money.
Most of us have funds going in multiple directions every month, and we use a wide range of payment methods, including cash, direct debit payments, online transfers and contactless.
This can make it virtually impossible to budget on the go.
The good news is that there are techniques and resources available to help you monitor spending and reduce the risk of overspending.
Budgeting and using a personal expense tracker can benefit almost anybody who is keen to maintain a firm handle on their finances.
If you struggle to save, you often find that your balance is lower than anticipated, or you’re concerned that you’re wasting money on unnecessary expenses, you might find that you notice a major difference in your finances moving forward.
Statistics from the 2019 Canadian Financial Capability Survey suggest that approximately half of Canadians use a budget, but that another 17% could be in a better financial situation if they chose to use a personal expense tracker.
Most of those who don’t budget use a lack of time as an excuse, with others suggesting that budgeting is boring.
Managing your finances may not be the most exhilarating pastime, but it can have an incredibly positive impact on your bank balance, your wellbeing and your saving goals.
What are the advantages of using a personal expense tracker?
We all know that life can get hectic, and it can feel like money is constantly going out of your accounts with very little traffic in the other direction.
Using a personal expense tracker is a simple, hassle-free means of taking control of your finances and gaining a better understanding of where your money goes.
Here are some of the most significant benefits of keeping an eye on spending:
- Saving money: many of us spend money on luxury items or purchases we don’t need or even want. If you’ve been paying for subscriptions you don’t use, for example, using a spending tracker will highlight areas where you can make cutbacks. Setting a spending budget will also help you save money both in the short and long-term. A US survey revealed that 93% of people gained a better insight into their spending habits after starting to budget.
- Dealing with debt: debts usually increase with time, so it’s best to tackle them before you start to incur penalty fees and high interest charges. Using a tracking tool, you can figure out how much you can pay off each month, gradually reducing your debt and moving towards financial stability and security.
- Saving for the future: even if you’re young and you plan to work for the next 20, 30 or 40 years, it’s never too early to start thinking about the future. Managing your money will enable you to save for retirement, or to set up a college fund or an emergency pot.
- Reducing stress: according to a 2018 survey, money is the most common source of stress among Canadian adults. Over 40% of participants rated financial worries the most significant stressor in their lives. Saving more, paying off debts and lowering the risk of overspending can make a huge difference to mental health and wellbeing.
Finding a personal expense tracker that works for you
Today, there is a diverse range of options on offer when it comes to tracking spending.
Some techniques and tools may be more appealing than others, and you might find that you want to try out a few different methods to see what suits you best.
Here are some popular options to consider:
- Pen and paper: traditionalists often favour pen and paper. This is a simple and quick budgeting method, which involves noting down your income and your outgoings to calculate disposable income and set a weekly or monthly spending budget.
- Spreadsheets: spreadsheets are an excellent option for those who like to update their budget on a regular basis and people who have different payments coming out of their accounts each month. You can create a basic template and then add to it to customise it for that particular month, and you can alter the figures as you go to ensure that your sheet is accurate and up to date.
- Apps: personal expense tracker apps have become increasingly popular in recent years. If you have a smartphone, you can enter data into an app, enabling you to track transactions, check your balances and manage your money, no matter where you are in the world. With apps, there is the option to link your account, but make sure you read the terms and conditions before giving your permission for the app to access your bank details. You may prefer to enter figures manually for security reasons.
Why don’t more people use personal expenses trackers?
There are several reasons why more people don’t track their spending.
Some of the most common barriers include people assuming that budgeting is time-consuming, boring and stressful, not wanting to commit to long-term tracking and being afraid of the findings.
The best way to prevent or reduce debts and to work towards savings goals is to front-up to the situation and take action as soon as you can.
Monitoring spending doesn’t have to be dull and if you use the right techniques, you can manage your accounts with minimal effort.
A personal expense tracker offers a raft of benefits for those who are keen to save more and keep financial issues at bay.
If you don’t already keep an eye on spending, it’s a great idea to investigate tracking tools and to seek advice from financial experts to help you improve your financial situation and eliminate stress.
If you have any questions, or you’d like advice, don’t hesitate to get in touch.
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