Track Expenses – Why it’s Important

Part of my goal in starting 20’s Finances was to help others take control of their finances. In order to be successful with your finances, it starts with creating a budget and keeping track of your finances. I have written about the best way to keep track of your expenses. If you have failed to take advantage of some of the easy ways to keep track of expenses, you are missing out on many of the benefits.


Why You Should Track Expenses

Keeping track of your spending is a way to keep yourself accountable. If you start writing down your expenses or using other free software, it makes you conscious of what you are spending. Instead of swiping that card because you have the money, if you know that you will have to justify the expense, it makes it that much more difficult to do. In other words, by simple tracking your expenses, you limit your spending.

By keeping track of your spending, you are also able to establish some goals. Setting financial goals is an important thing to keep you actively engaged with your finances. It is a means to motivate you to further success. Who doesn’t like achieving things, right? After you have been tracking your expenses for a while, you can view trends and mistakes and work on improving them. It’s hard to improve on something if you don’t know where you stand.

The Expense that I almost Missed

As I explained in the earlier article, for some reason, I like to torture myself by looking at my credit card statements each month. I personally review each purchase and add up the expenses for each category in my excel spreadsheet. It’s not the most efficient way, but it keeps me actively involved in making the most with my finances.

It was just a couple months ago that I realized an unexpected expense. There was a charge for $100+ for a rental car. I knew that neither my wife or I had rented a car that month and so I immediately investigated the charge. After my car was broken into and in the shop being repaired, it was taking longer than anticipated and so the body shop decided to pay for a rental car for two days at their expense.

To make a long story short, the body shop never paid for the car and my card was finally charged. I called the shop and finally got it worked out, but if I had not monitored my spending, I wouldn’t have noticed the fraudulent charge. It taught me an important lesson that you could be losing money if you are not keeping track of your expenses.

Best Way to Track Your Expenses

If you are looking for a great, easy way to track your expenses, you should consider a tool like Personal Capital. Personal Capital is a free online tool that links to all of your accounts in one secure, easy-to-use dashboard.

Using Personal Capital to monitor your spending can be easy because it’ll pull the transactions from all of your accounts. I use it to track my net worth and log in almost every day because I love seeing the balances change from day to day.

Personal Capital

14 Responses to Track Expenses – Why it’s Important

  1. I always look at my credit card statements each month as well. Since I am trying to get out of debt, there shouldn’t be any charges at all and that is usually the case. I know that if there is, something is wrong.

  2. I’m too distrustful to not pore over my expenses like a hawk. Probably not a good thing to always be expecting to get ripped off, but it keeps me going. Interesting to think how much is spent each year on erroneous charges.

  3. Another great reason why I eliminated all credit cards in my family a few years ago. I just found these companies extremely sneaky. Since I’ve been operating on an all-cash basis, never had a problem.

  4. Could catch! Its very important to monitor your expenses. I have seen quit a few transactions on credit cards that I would have missed reversing the charges, had I not checked my account activity.

  5. I use my credit cards almost exclusively so that I can track my expenses well and make sure that i am on budget etc. I ‘balance’ my credit card statement online every couple of days or so.

  6. Great catch!

    I usually monitor my statements every couple of months when I have some free time. I have too many cards that I use to look at them every month 🙂

  7. One of my friends decided to track her spending all of last year as a New Year’s Resolution, and she liked it so much that she’s kept it up this year as well. It really did help her decrease her spending — and helped her quit smoking!

  8. […] Track Expenses – Why it's Important @20sfinances "Instead of swiping that card because you have the money, if you know that you will have to justify the expense, it makes it that much more difficult to do. In other words, by simple tracking your expenses, you limit your spending." […]

  9. About six months ago, I was checking the balance on a credit card that I don’t use very often. I still check the balance religiously. I found a charge from a software company that I stopped using a year before. They had set me up for automatic annual payments when I first started using the program. I was able to call and have the charge removed. The only reason they returned the fee was because I caught the charge within 30 days.

  10. I track our spending using basic categories. But I admit I really need to sit down and do a more itemized account each month within each of those categories.