Do you track your income, expenditure and overall finance? Are you risking your financial health by not tracking your expenditure?
Don’t we all make sure our health is always in check. Similarly, we need keep all other aspects of our health in check – physical, mental or financial.
The first step you can take to keep your financial health in check is by, tracking your expenses. The budgeting, saving and splurging comes later on. Many people simply skip this because they think it is tedious to keep track of where they spend or because they keep for later and forget financial journalling all together. Not tracking your finances is as bad as first time swimmer jumping into the ocean alone.
Let’s take a look at how you are damaging your financial health by not tracking your expenses.
1. You are not financially aware
How can you know something is not working if you are not aware? Financial awareness is the key to your financial health. If you do not know where your money goes, how will you know what changes you need to balance the income – spending flow? Even the smallest of changes can make the biggest of impacts.
The benefits of being financially aware is you can tackle your spending habits at its core.
2. You do not have a healthy budget
Tracking is one of the most important aspects of starting a budget that works for you. If you are lacking in tracking your expenses you will not be able to properly identify the gaps in your spending and hence develop a poorly constructed budget you have no interest in sticking to.
Take out a few minutes out of your day to identify where you are spending and it will give you a clear picture of how to save your budget. Basing your budget on hard facts make you more positive and resolved towards sticking to it.
3. You do not know you needed to set goals
Did you know tracking your finances help you set attainable goals, which in turn motivates you to maintain the balance in your finance. Most people only make short term goals of saving for a certain event and spend it all. Those are not healthy financial goals.
You need to have both short and long term goals too so that you can have yourself covered. You can prioritize your expenses and savings too.
4. You are not able to identify your toxic spending habits
When you do not track your spending habits there are holes in your memory as where all your income disappeared to. Hence, you get back into the circle of overspending another month and another.
Tracking your spending habits means you come face to face with your toxic habits. Whether you are spending it on a gym you never go to, clothing articles you seldom wear or food that rot away – you need to face your demons to taken them down. Saving up on that extra cash goes miles in terms of saving for your future or emergency situations.
5. You do not know you need a budget buddy
If you are married and have combined finances tracking expenses help the both of you from spending in the same category. For example, if you are aware of your expenses then you will know that one has spent on purchasing groceries and you can spend on toiletries.
If you are not in a relationship, having a partner on the same journey will make it easier. The two or more of you can motivate and support each other on your way to a better financial health.
Ignorance is bliss is not a mantra you want to follow when it comes to your finances. You should make it a habit to track your expenses on every last rupee you spend or just generalize in terms of broad categories, whatever works for you.
Having financial clarity is the key to managing it and that can be achieved by tracking.
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Do you agree with our reasons? Leave us a reply in the comments below.