Introduction
Let’s see you working hard every month to earn money but don’t have control over your expenditure. You are spending all of your money before you get your next paycheck. If you are facing this problem every month then have you tried to figure out why this is happening. Because clearly you are having a problem with managing money. But do not worry you are not the only one facing this problem. There are a lot of people out there who do not know how to handle money responsibly. This is a very serious problem with the younger generation. People these days try to live one paycheck at a time but this is not the way as it can seriously affect you in the future. When people spend all of their hard-earned money they tend to use their credit cards. This only means that you are increasing your debt.
Missing your credit card due date is not only one of the reasons for your credit score drop but it can also result in the slashing of your credit limit. If this happens then you will be facing a lot of problems in the future. It will be hard for you to get loans if you have a low credit score. Even if you get loans you would get them for higher interest rates than what the people with high credit scores get. So it is very important to keep track of your credit score regularly using applications that allow you to check credit scores for free. Not everyone is good at budgeting. In fact, it may take people months to properly follow their budget. But it is not that hard either.
This article is completely about how you can track your expenses and why it is important. Let’s dive into it.
Why is it important to track your expenses?
You will not be able to achieve your financial goals if you don’t have a budget. Many people don’t even know what is budgeting. It is creating a plan and allocating money for different things in your life. Without a proper budget, you cannot control your expenses. If you can do that you can save money to pay off a debt or buy the latest smartphone in the market. But you have to know where your each and every penny is going if you want to create a budget. If you start tracking your expenses you will not only know where you are spending extra money but you will also understand your spending habits. You will know if you are spending too much money during weekends or if you are ordering food too many times from food delivery services.
In this way tracking your expenses will help you in knowing where you can cut costs. Not only one or two things but for tracking your expenses will make you realize there are a lot of areas where you can cut costs. Once you do this you will know what your spending habits are and what are the places you can improve. As you do this you will be able to create a proper budget for you. After creating a good budget plan all you have to do is stick to it. It will be a little difficult to follow it strictly in the beginning as you are not used to it. But you will learn to follow if you put in the effort. If you still cannot follow it then revise your budget. If you can do it you will be saving a substantial amount to reach your goals.
Let’s see how you can track expenses.
Recording your expenses
If you want to create a budget and want to track your expenses the easiest thing you can do is record your expenses. To track your expenses all you have to do is keep recording your everyday expenses. This is a simple but very effective way to track your expenses. You are very wrong if you think that you can track your expenses at the end of the month after you have spent all of your money. If you plan to do that then remember that you will not be able to recall each and every dollar you spent. You will only be remembering the times when you spent huge amounts. So what’s the point of doing something that cannot provide you feedback with 100% accuracy.
Do remember that you are doing all of this to stop spending money on things you can’t even remember. Just get a small book and write down what are the things you spent money on that particular day. Do it every day before you go to sleep. It will help you track each and every penny. Once you do this you will know where not to spend money. It will make you think and behave more responsibly with your money. As you create a budget basing those records and start following it you will start saving more and more money. You can use that money to pay off debt on time and increase your credit limit. These are some of the simple steps that can increase your credit score.
Use applications that are specially created for budgeting
This is the easiest way to track your expenses in today’s world. You are living a busy life and you don’t have the time to record each and every expense or you don’t know how you have categorized your budget. The simple and effortless way to know all of that is if you have a budgeting app. These apps are built for on the go money management and are very user friendly. So you will not have a problem using them. These expense trackers are the best for millennials who can’t stick to their budget.
Let’s take a look at some of the best budgeting apps.
Mint
Apart from being one of the first budgeting apps Mint is also one of the most popular budgeting apps out there. All you have to do is connect your accounts and categorize your money. There are many ways in which you can customize Mint. You can also find an option to set reminders for paying bills on time. If you don’t want to pay for a premium budget all then Mint is for as this application is completely free to use.
Mvelopes
This is another budgeting app that is great for tracking your expenses. The best part about Mvelopes is that you can actually interact with a money coach to know how to manage your expenses. But you have to choose their upgrade feature to be able to do this. The basic account of Mvelopes is for $4/month.
Conclusion
Creating a budget and sticking to it is very essential for your financial life. As an adult, you have to take responsibility and control your expenses. If you are carefree and spending too much money through your credit cards then understanding credit score ranges will help you rethink your spending habits. Use budgeting apps to track your expenses. Start doing it today if you want to have a good financial life in the future.
