It is such a shame to admit but I learned the importance of tracking my daily expenses through my sister who is 9 years younger than me.
When I had my short vacation last year, I saw her thick and worn-out diary. The pages were full of stapled receipts and notes with figures on it. Curious, I asked my sister.
I came to know that she has been tracking her daily expenses as early as 10 years old but took the serious turn of detailing every expense only at the age of 15. She continued practicing it until now and it has been very useful to her especially after she started working and earning her own salary.
Because of her records, she can calculate every year her annual expenses. She even confidently shared how much annual income she needs to survive and even mentioned which year she lived more expensively compared to the other years. She attributed this particular year with high cost of living when she moved to Manila (the capital of Philippines).
Transparency. Have you ever sometimes wonder where did your money go? I oftentimes encounter this situation when I receive extra money like bonus or an incentive. After few days, I ponder what happened to that amount as there is nothing left in my wallet. Tracking your daily expenses will entail detailed transparency in your expenditures.
Knows When Not To Spend. Monitoring your daily spending will give you an idea of your expenditures yesterday or the previous week. It makes it easier to realize that you have been overspending by just looking at your financial records. This is helpful especially when you are setting a daily budget. Once you recognize your overspendings, you can adjust or control your expenditures for the next few days to ensure that you will be in line with your budget until the next salary comes.
How much You can Save. Religiously tracking your expenses can help you save. You will not know from where to cut costs if you do not know where your money goes, right? Your records will show how much you are spending for entertainments or for weekly groceries. Thus, to increase your savings then you must slash your expenditures in your entertainment expenditures.
Setting Target for Next Year. I have been working in the hotel industry for some time now. After midyear, the management will be busy preparing their target and forecast for next year. In order to come up with these figures, they will base it from the previous performance and figures. Similarly, it applies to our personal finance. How can we set our monthly or annual target for next year if we do not know our performance and expenditures for the current year?
These are some of the benefits of tracking your daily expenses. I know that embracing this practice can be daunting. I did it and stopped after few months but now I am doing it for good and for real!
Here are some tips to make your daily tracking easier.
- Ask and keep receipts of your daily purchases
- Carry always a small notebook and pen in your bag. This is excellent way to jot down expenses while travelling and keeping records for expenses which do not have receipts.
- Spend 10-15 minutes in the evening to write down your expenses.
Hope it helps! If you have more tips, please feel free to share..