Track Your Expenses
James Schofield - May 11, 2023
Here are a couple of ways that tracking your expenses can help you close loopholes and keep more of your money.
Many people shudder at the thought of creating a budget mostly because they are worried about what they might find if they start tracking their expenses. Another reason is that some people just don’t enjoy numbers and spreadsheets. There’s certainly a time commitment involved as well, but there are many helpful apps nowadays that make tracking expenses easy. Although you may think that tracking expenses won’t provide a real benefit, there are more than a few ways that it can help you keep more of your hard-earned dollars.
Identify vendor mistakes and duplicate expense:
Before I started tracking my expenses, I did not realize I had $10 coming out of my bank account every month for credit card overdraft protection. After I signed up with mint.com for free, mint started to alert me that my bank was charging this $10 fee every month. When I noticed this, I called my bank, and when they told me that I had asked for this, I asked them to pull the call where I gave a verbal agreement. Not surprisingly, they could not find that call. I had been paying this for about 24 months, and I had not even signed up for it. When they realized this, they reimbursed me for about $240. They got off easy as I did not push for interest on that amount!
Unsubscribing from services you do not use anymore:
I recently got married, and I realized that we could save some money if one of us gets rid of our Amazon prime membership. A membership costs about $80/annually, so it is not the worst thing to miss, but there is usually more than one charge that you could be missing. You can also find other opportunities like car and home insurance that you can bundle for discounts as well as cell phone, internet, and cable. Also, NSF fees can usually be reversed with a quick phone call to the bank.
It will keep you accountable:
By tracking expenses, you can identify problematic trends and come up with a plan to address them. As an example, my wife and I are often shocked by how much we spend on food, especially going out to eat. All it takes is to go out to eat with friends and family a few times a week, and you will be amazed at how much you are spending at restaurants. We saw this trend repeat over a few months and realized we should investigate this. We enjoy cooking at home, so there was really no reason for us to go out to eat as often as we do. Once you go through the expenses, you start to realize that your enjoyment and experience is not worth the cost. There have been at least two places that we do not go to anymore for that reason. I will not name them here.
Ultimately, tracking expenses creates transparency. When you look at the savings of one small change, it may not seem like a lot, but tracking expenses and planning goes a long way in creating better financial outcomes.