Keeping track of your expenses is crucial. If you are just starting, it can seem tedious and intimidating, but it is worth the effort. Expense tracking enables young adults to see the reality of their financial situation. Fortunately, insights from financial expert Don Gayhardt can help young adults keep their expenses in check. Here are a few tips that you can follow to help you track your expenses.
Become Financially Aware
Identify your financial habits by reviewing your financial statements. Looking at your credit card and checking account statements can show you where you are overspending. Knowing how you spend your money will let you know which habits you must change to attain financial freedom. Small daily expenses can blow your budget. The only way young adults can build wealth is to spend less than they earn.
Stick To Your Budget
While not always fun, it is important to make and stick to a budget. Look at your income each month, set aside money for your necessary expenses, and place the remainder into a savings account. If possible after paying for the necessities and saving, you should also budget money for fun things, like going out to eat or to the movies. This will make it easier to stick to your budget.
Use Tracking Tools
You can use various financial mobile apps to track your spending. Most of these apps feature charts and graphs that illustrate different spending habits. Couples can use apps that can sync their expenses to avoid overspending on the same item.
Spreadsheets are another invaluable tool for tracking expenses and are a good choice for those who prefer to use a computer. One benefit of using a spreadsheet is you can track all your spending habits in one place, rather than having to log into different bank and credit card accounts. Most banks will allow users to import their bank transactions, making it easy to get started.
Categorize Your Expenses
Grouping your expenses helps you know where you are going wrong. You may realize that you are spending on things that you could do without. Your monthly expenses, such as debt payments, utilities, and rent, are less likely to change. Young adults can consult a financial adviser for advice on adjusting their recurring expenses, such as rent, loan payments, and mortgage.
Variable expenses, such as travel, clothing, and food, change from month to month. This is the best place for you to save money. For example, purchasing your own coffee maker seems expensive, but once you see how much you spend on individual cups of coffee each month, it becomes clear that the coffee maker will not only pay for itself but will also save you money down the road.
These tips can help you find out where you are overspending. Mastering your spending patterns and creating and sticking to a budget will help keep your spending in check. It can seem overwhelming to monitor your expenses all the time, but it will pay off as you begin to build wealth.