Why it is Important to Track Spending

One of the things we here at iMoneyCoach stress to our clients is the importance of tracking. It is crucial if you want your budget to work because you know exactly how much money is coming in and going out of your household and where exactly it is going. This can help you stop spending leaks and make realistic adjustments to your budget and lifestyle.

So what is tracking anyways? Tracking is a system of recording every penny you earn and every penny you spend. We have tracking books available in our store to help you do this. Basically, you take your tracking book with you whenever you go out so that you can record your purchases right away. You keep a running total of how much you have spent for each of your budget line items – so you can see at a glance whether you have enough left in your budget for that purchase or if it is something you should either wait for or not buy.

If you have ever had to fill out expense reports at work, you’ll know that small businesses to large corporations use tracking to run the company. They would not be successful if they did not know where money was coming in and going out. That’s why if you forget to keep your receipt, you often get stuck footing the bill for a work-related expense. It’s not that the company is out to get you or to be unfair. They are simply sticking strictly to their budget and tracking expenses – and being successful because of this.

So what are the basics? Well, I said it before, but you need to track your purchases as you spend. None of this, “I’ll record it later” business. As soon as you spend the money, write the total in your book and subtract it from your budgeted amount (this is recorded at the top of the list each month so you can keep a running total) so you know exactly how much you have left in that budget line item. If you are at the store considering purchasing a new pair of shoes, you can look in your clothing budget and see whether you have enough left to cover the purchase or if you should wait until next month. “But this pair of shoes is a great deal,” you say. Is it great enough to throw you off track and potentially keep you from achieving your big goals like having enough saved for retirement or to send the kids to college? Tracking helps you evaluate these great deals and make sure you can a) afford them and b) make sure they don’t interfere with your important, big goals and dreams.

All that being said, I highly encourage you to start tracking right away. If you need help setting up a budget, learning how to budget, and figuring out how to track expenses accurately, be sure to contact my office. You can call us at 303-462-2001 or visit our home page to find out more about how we help people do these things so they can be financially successful (yes, we believe that YOU can be successful with your finances).

Tags: budget, tracking, tracking book