If you are someone who meticulously writes down and tracks all your expenses while maintaining a daily balanced ledger of all your accounts, you are already way ahead of the crowd! That, or you're an accountant. However, for the rest of us, tracking expenses is usually put off for a marathon day of catching-up, "whenever there is time," or, worse, when that dreaded IRS audit paper shows up and then that box of receipts becomes a dreaded "pit of despair."
Luckily, for the majority of us that fit in the "pit of despair" category, technology has advanced to take a lot of the work out of expense tracking and keeping up with your finances. Here are a few reasons why tracking expenses is so important, and how you can keep up with your own.
The Importance of Tracking Expenses
Create Financial Awareness
The real reason you track your expenses is to create financial awareness. If you don’t know where your money goes or how you spend it, you won’t know what habits you can change in order to make your money work for you. Tracking your spending allows you to see where your money is really going. It is essential if you want to understand your financial habits and make changes to them. Even your small daily purchases can add up to blow your budget. It is easier to make changes when you realize that you are not reaching your financial goals because you eat out every night.
Stick to Your Budget
It is also essential when you are trying to budget. If you do not track your money, then you will not know when to stop spending in a category. it does not need to take very much time each day, but if you consistently track your expenses, you will be able to get out of debt and make the necessary changes to finances. This will allow you to begin to build wealth and go after the things that you want out of life.
How to Keep Up
Take a picture, it just may last longer
These days, most everyone has a smart phone, or, at least, a phone with a camera. Immediately take a picture of any paper receipts so that there is no panic if it gets lost for any reason. Of course, having the paper copy as a back-up is always a good idea. The IRS recommends holding onto receipts that may affect your taxes for at least three years.
Use an app or user-friendly online program
Another really easy way to track your expenses is in a software program like FreshBooks. Additionally, if you are using a check-writing and printing or mailing service like Checkeeper, the expenses sync automatically between the two.
FreshBooks powerful and simple expense tracker makes tracking business expenses ridiculously easy. You’ll know at a glance what you’re spending and how profitable you are, without the headache of spreadsheets or shoeboxes of receipts.
Categorization of expenses in FreshBooks is made with tax time in mind, so it’s easy for you (or your accountant) to file. At tax time you have all the information you need without any of the complexity.
The connection of Checkeeper and FreshBooks lets you have control over your expenses with the ease of automation. Using both programs not only allows you to automate your check writing, but also automatically imports checks as expenses into your FreshBooks account. This saves the headache of extra time and effort that can be put back into making your time count for you, again. Check out FreshBooks and Checkeeper (both offer free trials to start!) and see how they can benefit you.
No matter how you track your spending, be it using online software, a spreadsheet, or old-fashioned pen and paper, it is an essential money-saving process that is essential to success.