Why it's important to write down all your expenses.

 Why it's important to write down all expenses

Hello Storytime readers, today I want to talk to you about why it's important to write down all of your expenses. Last year I started an experiment where I started tracking all of my expenses daily. The results were insightful and life-changing. I know this should be basic for some of you. But I don't think everyone realizes why this is important. I didn't as well until I started this experiment. It gave me different insights into my lifestyle and it made me realize what changes I had to make in my life to make room for improvement.  Because as human beings we constantly strive to improve our situation. It may be physically, mentally, emotionally, or financially. Finance is a subject that attracts a lot of attention.  Naturally, since everyone wants to get a handle on their finances. To achieve this, we must analyze and study our spending habits.  All successful people and businesses keep track of their income and expenses. Now you must be wondering why is it so important to write down all your expenses? My answers are in the following financial lessons that I learned throughout my experiment.

   Writing down your expenses gives you insight into your spending habits

 As mentioned before, writing down your expenses gives you insight into your spending habits. Throughout my young life, I have discovered that the way we deal with money is based on our attitude and the habits that we maintain. When I started this experiment I wrote down my daily expenses and would subtract them from my income. At the end of each month, I would review the numbers. It didn't take me long to realize that I was wasting a lot of money on unnecessary expenses.  Sometimes it's the small costs that add up. For me, it was triple chocolate cookies for you, it might be something else. Sometimes it could even be lifestyle choices that add to your expenses. For example, maintaining an alcohol or smoking habit or having a shopping addiction can add up real fast. Maintaining unhealthy lifestyle choices directly impacts your financial health as well. Therefore having an insight into your spending habits can help you reflect on the choices that you make. When you have identified unhealthy spending habits you know what you have to let go of to be in a more financially stable position.

Writing down your expenses can help you define necessary and unnecessary costs

Now that you have written down all of your expenses, you have a clear image of where your money is going. Another benefit of writing down your expenses is that it helps you identify necessary and unnecessary costs. Make two tables and under necessary expenses, you place the costs of your basic needs. This can be living expenses, food, transportation, education costs, healthcare, investments, etc. To help you define necessary costs ask your self is this expense something that enables a basic requirement of life? If the answer is yes, you place it under the necessary expenses table. Everything else goes under unnecessary expenses. If your unnecessary expenses take away a large part of your income then it's unhealthy for your financial status. Especially if the unnecessary expenses outweigh your necessary expenses. Now that you know what the costs of your unnecessary expenses are try to limit them as much as possible. Reducing these expenses will only mean that you will have more money to either save or invest wisely.

               Writing down your expenses helps you plan for the future

When you write down your expenses, it can help you plan for the future. Planning is an important tool that helps us achieve goals. What are your financial goals? When you know what your goals are and you have a clear idea of where your money is going you can plan better for the future. It enables you to come up with strategies to wisely engage with your finances.  The money you would have spent on unnecessary costs, you can now use for investments. I have seen people who make a lot of money and they throw it all away without thinking about the future. I have also witnessed people who don't make as much money use financial planning to create a better future by starting a business. It's how you deal with your money that decides how financially stable you will be in the next years of your life. If you start planning at a young age, you won't regret it when you become older.

      Writing down your expenses helps you realize what you can and can't afford

Another benefit of writing down your expenses is that it helps you realize what you can and cannot afford. We spoke about planning and a part of planning is budgeting. Now that you know where your money is going you can create a budget for yourself using planning as a tool to improve your finances. Try to cut down the unnecessary costs as much as you can by creating a budget for yourself. Once you have made this budget, stick to it. Persistence is key, budgeting can help you save money and get a better handle on your spending habits. If you know what your budget is, you won't end up overspending. The money that you save can be used for better things that help improve your financial health. 

          Writing down your expenses can help you let go of unhealthy habits

At the end of the year, I once more reviewed my expenses. It helped me realize that there were some unhealthy spending habits and life choices that I made. The numbers inspired me to make a change. Everyone faces their own struggles and we all have some bad habit that is undermining us. Yet we often get stuck living in the moment and don't realize what the effects could be on a long term range. I assume that if you are still reading this article it means that you want to bring improvement to your situation. To improve you must be willing to honestly reflect on your actions. Taking financial responsibility for the choices that you make and the negative spending habits that you feed is the first step. The second step is letting go of what no longer serves you. Having an overview of your expenses helps you take financial responsibility for the choices that you make in life.

        Writing down your expenses gives you ideas to improve your income

Writing down your expenses not only gives you an idea of how you spend your income, but it also gives you ideas on improving your income. To live the lifestyle that you desire and to maintain it, you probably will have to improve your income. No matter what your financial position may be everyone wants to earn more. If you want to earn more you will have to make your money work for you. When you know what the unnecessary costs are you know how much of that you can direct towards multiplying your income. If you are not making more than your necessary expenses you will also know that it's time to increase your income. Being financially healthy means having a healthy balance between the money that you earn and the money that you spend. 

                  Writing down your expenses helps you appreciate your money

Most people trade their time for money. Others make use of passive income. There are different ways to build an income. Whatever your situation is if you work hard for your money you should appreciate it. Respecting what you earn will make you spend it even wiser. When you write down your expenses you will appreciate your money more. This enables you to once again make better choices. Having a good grip over your finances builds confidence in your own abilities as well. Having an insight into your finances will also help you realize how much of your hard work goes into what. When you start looking at it that way, you will have better control over your impulses.

         Writing down your expenses helps you to organize your life better

Having a clear picture of your finances can actually bring more structure into your life. By being aware of your spending habits you can organize your life in an efficient matter. Eliminating bad financial behavior is just the beginning. Bringing structure into your financial habits requires a vision. A vision that you will have to build based on your current financial situation. Replace the bad with the good. This is only possible if you are aware of the bad. That is another reason why it's important to keep track of your expenses. 

                Writing down your expenses helps you track progress

When you write down your expenses it also helps you track progress. Has there been an improvement in your spending habits compared to the previous months? How close are you to realizing your financial goals? Is there room for improvement? What are the strategies that I can apply to stimulate my progress? These are questions that help you evaluate and boost your financial growth. You can make a chart throughout the year based on your financial habits. If you haven't noticed improvement yet you can always look back at the numbers to see where you went wrong. 

The important thing to remember is that it's a journey with ups and downs. Writing down your expenses is a tool that you can use for financial improvement. You will learn at each step of the way, but as I always keep saying it's the journey that makes it interesting.  Make proper use of this information and let it motivate you to start writing down your expenses. Good luck on your journey and until next time right here at Storytime.