Why should you keep tabs on your expenses?

1. Tracking helps identify where you may be overspending: We’ve all been there. Just a few N1K subscriptions, N2k snacks, and boom! Your balance’s approaching one figure. “where did all my money go?” Observing your cash output makes you aware of the true cost of unnecessary expenses.

2. You get to make more informed financial decisions: In continuation with the aforementioned point, when you know the actual cost of certain habits, you’re better equipped to make wiser purchasing decisions, especially when you have dependents. You wouldn’t dream of shutting down clubs when you haven’t saved enough for rent, would you?

3. Tracking is essential to budgeting: As you may know, budgeting is like a monthly money plan where each Naira is maximized for the best possible outcome. The best way to stick to a budget is by tracking your expenses. As we said earlier, tracking your expenditure helps you make smarter decisions with your money. This, in turn, leaves you with more disposable cash, which can be redirected toward the essentials within your financial plan.

How to track your expenses: Now that you understand why documenting transactions is essential; let’s discuss how to track your expenses in three simple steps.

1. Create spending categories: This step requires you to group all your expenses into different categories based on importance or any other scale preferable to you. Examples include, Food, Transport, Subscriptions, Utilities, maintenance, healthcare, etc. Using “categories” serves for neat organization of expenses. They are not meant to replace the recording of each individual expenditure.

2. If it comes out of your pocket–pen it down: This is the hard part–recording. All month long, your transactions should be accounted for. You can do this in a journal or via a mobile app. Today, using mobile apps is more convenient, and they help you build a tracking habit when used correctly. Also, some mobile apps can be linked to your bank accounts, preventing the need for manual entries. Keep reading to see our recommended list of mobile tracking apps.

3. Have a specific day for tracking: This step applies if you prefer to record your transactions manually. If you can’t record your transactions at the end of each day, dedicate one day every week as the “Day of Recording.” Without a “Day of Recording,” there is bound to be a financial day of reckoning down the line.????

Side Note: To get satisfactory results, tracking should be a habit, not a one-time quick fix.