5 Reasons why you should monitor your expenses

Do you find yourself living month to month, paycheck to paycheck without being able to save any money at all? If you answered yes, do not worry, because you are not alone. Many people live like that, and it does not depend on the size of their paycheck, but on their financial discipline. Those two words make a lot of people cringe inwardly, and avoid the subject altogether, often claiming that being disciplined financially is impossible unless you hire a bookkeeper. Often, they are ready to claim that bookkeeping is a task that only small business owners and entrepreneurs need. As a statement, it serves only as a cloth they use to cover their own financial irresponsibility. It is true that small business owners, companies, and entrepreneurs need to hire a proper bookkeeper.

However, everyone should do basic bookkeeping, or simply monitor their expenses for a while. Below, you will find several reasons why you should monitor your expenses, and how you should use the information.

Financial awareness and responsibility

Once you have started monitoring your expenses, you will no longer be the same person when it comes to your finances. Even if you continue to spend just as much as you did before, you will not be aware of it. Gradually, you are bound to cave under the pressure, and focus more on spending money on what you really need, instead of splurging on things that are expensive but unnecessary. Discovering just how much money you are spending on unnecessary outings, gadgets, media and entertainment can be quite scary, but the long-term effects are very positive.
Moreover, it is easy to track your expenses – you can do it using a spreadsheet or more advanced bookkeeping software. If you worry that getting a sophisticated software will slow down your system, you can use atMonitor to track your Mac OS, because as a Process Explorer tool, you can it use to view the activity of your system. Moreover, you can use atMonitor to track the state of your system, much the same way you would track your expenses.

Creating your budget

When you live from paycheck to paycheck, you are forcing yourself to live on a limited budget. Once you have spent the money making up your whole budget, you wait for the next paycheck to start the process all over again. This can be quite stressful, even if you do not blame the stress on your financial expenses. When you have tracked your expenses for a month, and discovered how much money you are spending on unnecessary things, you can create a monthly budget. Well, it takes courage to face the music and admit that you have been splurging on unnecessary items. In order to create a budget that will allow you to save money during the month, you would need to change your habits in a significant way, and even devise a complete lifestyle change for yourself and your family. However, you will be able to create different types of budgets, where you will plan your expenses and manage to save money at the same time.

Planning your expenses

If you have not spent a significant amount of time monitoring your expenses, you will not be able to plan your expenses in a way that allows you to both have everything you need to live comfortably and save money at the same time. However, when you stop spending money on unnecessary things, you will be able to plan and know from the moment you receive your paycheck how much money you can and should plan to save that month. Life is unpredictable, no matter how much we like to think we can control it. Often, you need money for emergencies, and often, those emergencies will put a dent in your balance if you do not have a significant amount of savings. When you plan your expenses, divide them by necessary expenses. In this category, you should include rent, food, gas; credit payments and every other expense that you cannot eradicate form your life. However, you should also create other categories, including savings, emergency and free spending category. Just because you want to increase your financial stability and spend your money responsibly, it does not mean that you must cut out all expenses that are not necessary, but do bring you joy and happiness.

Saving money

There is no need to stress on the importance of saving money. When you save money, you can plan experiences – holidays, road trips, and the house you have always dreamed of owning, but never could imagine affording it. Many people do not think that they can afford to save money, and when they spend money on unnecessary things, they fail to realize that they could save that money for bigger, better things. However, your financial awareness prevents you from forgoing saving, because when you know that the amount of money you spent on unnecessary things adds up to the amount of money you need for your dream holiday, everything changes. Saving money will not be difficult for you anymore, and you will find yourself actively preventing yourself form saving the money you would have otherwise spent unnecessarily.

Prevent excessive frugality

Discovering just how much money you have been spending when you could have saved towards affording a better future, it can be scary. Moreover, you might begin to save money at the expense of living comfortably. Suddenly, you might find yourself saving on food, medicine, and preventing yourself from spending money on the things that you actually need. This can be a sign of excessive frugality, in which case, you would end up living an extremely modest lifestyle where you do not allow yourself any kind of expense. Is it advisable to go out every night and eat your meals at fancy, expensive restaurants? Not if you cannot afford it. However, occasionally, if having dinner at a restaurant, or a new shopping trip falls into your planned expenses, there is no need to shortchange yourself. Monitoring your expenses will let you know exactly how much you can afford to spend, while saving a significant amount towards your future. After all, the goal is to be more responsible financially, not to simply save money all the time until you forget why you are saving so much.