Are you living beyond your means every month? If so, you aren’t alone. The average American household has almost $140,000 in debt, and it seems as though that figure is growing every year.
If you’re sick and tired of spending too much money on a monthly basis, there’s an easy way that you can manage your spending more effectively and start to save. By utilizing a spending tracker, you can keep a close eye on the money you have coming in and the money you have going out so that you can get a better grip on it.
Spending trackers are excellent tools for monitoring your expenses. Let’s take a closer look at the 7 benefits you’ll enjoy when you make the decision to use one.
1. A Spending Tracker Will Help You Create a Realistic Budget
One of the best ways to get your household’s money situation under control is by putting a budget into place. Just one problem: It can be difficult to know where to start when it comes to budgeting your money.
A spending tracker will make the process a heck of a lot easier. You will be able to see how much money you have coming in every month as well as how much money you have going out. You can then categorize your spending to see how much money you’ll need to cover certain costs.
Here are some sample categories you might want to use for your budget:
- Credit card payments
Your tracker will show you where certain expenses should go and then allow you to monitor them every month. It will provide you with a snapshot of your expenses and make budgeting a lot simpler.
2. It Will Show You Exactly How Much You’re Spending on Things
There are many Americans who are under the impression that they’re spending a lot less on certain things than they really are. For example, many people believe they spend less on groceries than they actually do.
You might think that you spend, say, $100 every week on groceries, which means you spend about $400 on them over the course of a month.
But what about that midweek trip you made to the grocery store during the first week of the month where you spent $40 for a special meal for your parents?
Or what about the $60 late-night grocery store run you made during the second week to pick up milk, bread, and a few other “essentials” prior to a snowstorm?
And what about the time you didn’t feel like cooking dinner and instead spent $30 at the grocery store on TV dinners for your family?
That’s an extra $130 that you spent on groceries that particular month! And while you might not necessarily realize that you spent that money, your spending tracker will tell you all about it and show you just how much money you’re really spending on certain items.
3. It Will Motivate You to Cut Back on Needless Spending
Despite all the debt that Americans carry around on a monthly basis, the average person also has quite a bit of disposable income to work with every month. A 2015 study showed that the average disposable income per person in the U.S. comes out to be more than $3,200.
You might not necessarily have that much disposable income coming in. But even if you do, there’s a good chance that you don’t see much of it in your bank account at the end of every month.
That’s because many Americans do a lot of needless spending every day. They can’t resist buying a candy bar and a soda when they have a break at work, even though they’re not hungry or thirsty. Or they can’t resist picking up a new pair of sneakers and a shirt at the mall when they’re shopping, even though they just got a new pair of sneakers and a shirt the previous week.
If you work hard for your money, you might think you’re entitled to spend a little bit of it here and there. But far too often, Americans spend money here and there on a number of occasions every month. It drains their bank accounts without them even realizing it.
A spending tracker will help you to see all the needless spending you’re doing every month. When you look at it after a few weeks, you will think:
- “Did I really spend $200 last month going out to the movies when I could have watched movies at home instead?”
- “How in the world did I manage to spend $600 on happy-hour drinks last month?”
- “Am I making enough money to justify devoting $800 every month to eating out with my friends?”
You should be able to spend some of your disposable income on yourself. But you might not realize exactly how much of it you’re currently spending on things that aren’t essentials.
A tracker will show you where you could cut back and force you to rethink your spending habits as a whole.
4. It Will Encourage Your Spouse to Reduce Spending
Most couples sit down at some point during the month to talk about their expenses. Many of those talks go something like this:
- “Hey hubby, we’re spending too much money. Can you please try to cut back?”
You might think this is a constructive way to approach a talk about money. But in reality, your spouse might already think they’re doing everything they can to cut back on expenses, so this isn’t going to produce much in terms of results.
Instead of being vague when you talk about money with your spouse, you can be a lot more specific by using a spending tracker. Rather than having the conversation above, you can say something like:
- “Hey hubby, we’re spending too much money. I noticed that you spent almost $600 last month on purchases at the home improvement store and $800 the month before that. Can we either figure out a way to cut back on those expenses or cut back our spending in other areas to make up for the deficit?”
By taking this approach, you will use your tracker to shine a light on your expenses so that your spouse understands exactly how much money is being spent on different items. It will make budgeting money easier on both of you.
It will also motivate your spouse to get more involved in managing the expenses.
5. It Will Reveal Expenses You Forgot All About
When you first start using a spending tracker, you will probably be surprised to see some of the expenses that show up on it.
Remember the iTunes subscription you signed up for a few years back and then stopped using? That’s on there. So is the movie streaming service you signed up for on a trial basis and then forgot to cancel once you started getting charged for it.
If nothing else, a tracker is a great way for uncovering all kinds of expenses that have long slipped your mind.
When you check your bank account statement every month, you might miss the $13.89 charge here and the $17.99 charge there for these subscriptions. But they’re there! And they’re likely causing you to spend more than you should every month.
6. It Will Help Add Money to Your Savings Account
If you want to start saving, using a spending tracker will make it easier to do. You can save simply by cutting back in other areas and devoting a little money towards your savings every month.
For instance, let’s say you took the $13.89 and $17.99 charges that you didn’t even know about above and directed them towards your savings account instead of paying for services you’re not even using. It would allow you to save $31.88 every month.
That might not seem like a lot. But over the course of a year, you could put $382.56 into your savings account instead of using it to pay for services that, again, you’re not even using. It wouldn’t affect your normal spending habits at all, but it would make a difference in how much you can save every year.
7. It Will Eliminate a Lot of Stress Associated With Money
Money has been found to be the leading cause of stress among Americans.
If you find that you’re stressed every month because of money, you should do something about it. You should give a spending tracker a shot and see how it helps.
A spending tracker won’t eliminate all of the stress associated with money. But it will put you back on the right financial track and help you get a hold of your money-related issues.
Within just a few months of using a tracker, you will start to see more money in your savings account, and you will see less unnecessary spending as a whole. It will cut down on your stress levels and allow you to enjoy your money rather than worrying about it all the time.
Starting Using a Spending Tracker Today
So, what are you waiting for? If you’re not using a spending tracker already, you should start using one now to see how it could benefit your life. You should also find other ways to manage your finances so that you don’t spend your entire life stressing out over your money.
Check out our blog for more information on how you can make your money work for you instead of it being the other way around.