Do you track your spending? If not, today is a great day to start! With automated tools, it’s easy to track your spending. You’ll have more control over where your money is going and you’ll have a better chance of meeting your financial goals.
Read on for important reasons why you should start tracking your spending today. (And when you’re ready to start tracking your spending, head over here!)
1. Miskeyed entries
When I started tracking my spending, I was shocked at the amount of keying errors I found in my credit card and debit card purchases. A purchase that was supposed to be for $19 would be keyed in as $91. If I wasn’t tracking my spending, I wouldn’t have noticed this error and would have been charged an extra $72.
2. Duplicate charges
Duplicate charges are another common error I find in my credit card and debit card transactions. You know the warning you get when you accidentally hit the “Submit Payment” button twice? The one that tells you to slow down so you don’t submit a duplicate payment? Well, some systems aren’t set-up to prevent that duplicate charge. So if you accidentally do hit the “Submit Payment” button twice, you’re actually charged twice.
Duplicate charges sometimes come because of the vendor’s error. I just caught a $700 duplicate charge in my bank statement because my county government charged me twice for personal property tax.
3. Service fees
Some services have such confusing fee structures that you might not understand how much the service costs until you get the first bill. If you’re not tracking your spending, you might not notice right away that you’re being charged excessive fees for these services.
Although I try to understand the fine print before signing up for a service, sometimes I’m surprised when the service fee hits my credit card.
More than once, I’ve been able to call a company that charged an excessive service fee and have convinced them to cancel the service and issue a refund. You won’t get a refund if you don’t ask and you won’t know to ask for a refund unless you’re tracking your spending.
Ever return something and then just forget about it? Are you sure you were actually refunded the cost?
By tracking your spending, you can check to see if you were actually refunded the cost of your returned item.
5. Accidental charges
Do you sign-up for free trials? Do you try to negotiate deals to have items thrown in for free?
If the answer is “yes” to either of those questions, you might be surprised to learn how often you’re accidentally charged for items that you were supposed to get for free. Billing systems aren’t always set-up to allow for these kind of deals, so you might be accidentally charged.
If you’re tracking your spending, you can catch these accidental charges and contact the vendor to correct the issue.
6. Cancelled subscriptions
There are a lot of subscription services available now – meal kits, clothing, wine, groceries, and many more.
I love these services. But some of them have administrative struggles and may be slow to update your account for the cancellation. You want to track your spending so that you catch any situations where you’re charged for a service after you’ve already cancelled it.
Unfortunately, the electronic world we live in makes it easier for thieves to steal our financial information.
Ideally, your credit card or debit card company has excellent fraud protection and catches fraud as it occurs. But some of the transactions may be so similar to your own purchase history that it might be difficult for them to catch everything. That’s where you come in. If you’re tracking your spending, you can quickly identify if a transaction was made by someone other than you.
8. Know your spending habits
Before I started tracking my spending, I thought I had a pretty good idea on how I spent my money. But if you’re like me, you might be completely shocked at your actual spending habits once you start tracking your spending.
Tracking my spending was the wake-up call I needed to get my finances in order.
9. See where you can cut back on spending
Once you know where you spend your money, it’s easier to see ways to cut back on unnecessary spending.
It’s easy to justify small costs as you make them. What is a $5 purchase going to hurt? But small purchases can add up to big costs by the end of the month.
Tracking your spending can help you see where small purchases add up and where you can cut costs.
10. Create a budget
The best budgets are aligned with your specific situation. It can be hard to create a budget when you don’t know your current spending habits.
If a budget doesn’t match up with your spending habits, it’s easy to go over budget, get frustrated, and then abandon the budget completely.
By tracking your spending, you’ll know your spending habits and can use that information to create a more reasonable budget.
As you can see, there are many important reasons to track your spending – including learning your spending habits to create a budget. When you’re ready to create a budget, head over to Create a Budget: Easy Step-by-Step Tutorial.
For more information on how to track your spending, check out Budget Tutorial: How to Track Your Spending (the Easy Way!).