This article was also published on Plannerd.io
I must confess: I wasn’t very diligent on tracking every single expense I have. I always think that I am the big picture guy; I do not always look at the details. However, after reading a few blogs like RinggitOhRinggit and met Suraya in person, I was fascinated at how she tracks her expenses with so much discipline.
So, I decided that as a financial planner, I should also start tracking my expenses.
It was slightly more than a year since I first started tracking my expenses, here are the top 5 benefits I personally experienced.
1. Budgeting becomes a lot easier and less plucking random numbers
Like I said, I am usually the big picture guy, I create budgets instead of expense tracking. My logic was simple, if I spend within my budget, I’m fine.
Little did I know; budgeting and expense tracking works so well together.
When I create a budget, I will allocate where my money goes to. However, these allocations are based on a rough estimate, I have no data to back-up my budget. But when I start tracking my expenses, my budgets are a lot more accurate and now I can do a more detailed budgeting.
2. I have better insights into my spending habits
There are many ways to track your expenses. For me, besides splitting my expenses into different categories like “Food”, “Travelling” and “Clothing”, I will also tag these expenses into “Needs”, “Wants” and “Business expenses” so that I can have a quick glance on how much am I spending on my Needs vs Wants.
Be creative with the way you track your expense. If anyone of you are interested to know how I track my expenses, please leave a comment down below and I will share with you my expenses tracking strategy.
3. Motivates me to cut back my expenses
Since I have more data and insights on my everyday expenses, it really motivates me to cut back on my expenditure. Every month will be a whole new challenge to see if I can survive in KL with less.
Previously, when I was relying purely on budgeting, I tend to spend more if I have surplus during the end of the month. Now, I become a lot more mindful when I spend my money.
It became my secret quest to find under-priced products or services while maintaining the same quality and value.
4. A constant reminder on my lifetime goals
I tend to have my “weak moments”. I may spend more than I should especially when my ego or self-worth is challenged.
Yeah, it may sound stupid, but this is a real issue. Some people tend to overspend due to peer-pressure. There are also plenty of studies and research conducted, proving that many people are spending too much money to impress people they do not know on social media.
So, by constantly tracking my expenses, it became a daily reminder on why I am doing all of this in the first place.
5. Bring relationship closer
According to Hannah Yeoh, our Deputy Women, Family and Community Development Minister, financial problem is the main cause for divorce among the non-Muslims in Malaysia.
Ever since I started tracking my expenses in front of my girlfriend, she started to pick up the habit as well. She is also experiencing the same benefit I mentioned above.
I truly believe that having the same wavelength in terms of finance between you and your partner is crucial in a stable relationship.
I also have a colleague whereby her entire family, including her children is also tracking their expenses daily. This enables the family to be more transparent and prepare the children for their future.
So there you have it, these are the 5 main benefit that I experienced after 1 year of expenses tracking. Do you track your expenses? What are some benefits that you think I missed out? I look forward for your comment.