Think of an expense tracker, and two emotions will likely pop into your head. You either feel intimidated, or you see how it can add value to your budget and keep spending on the right path.
We know how people view technology can vary depending on generational barriers or an absence of financial literacy. But in much the same way smartphones had a small learning curve when you first bought one, these tools are no different.
The make the complex intuitive, and they add several life-changing benefits. Let’s look at the top five.
1. They Isolate Spending Problems
Low-income households spend a higher percentage of their budgets on the necessities of life. This makes tracking each dollar of the utmost importance.
Four-dollar lattes just aren’t as appealing when you realize the same amount of money could feed the entire family for a night. Using an expense tracker helps you identify such problems and regain control.
The good news: you can make your dollar stretch further by bulk-purchasing wholesale items. It may take planning and a few weeks of sacrifice while you stock up, but once the routine is in place, you don’t have to look for the money you’re saving.
2. Help Maintain the Household Budget
Any budget breaks down into five essential categories. They are as follows:
- Income/revenue sources: how you meet every other goal; easy to calculate because sources are usually more limited than they are on the debit side.
- Spending and expenses: things you don’t necessarily have to buy, but you feel compelled to (health insurance, grocery bill, entertainment, for examples).
- Bills: what you either have to pay if you wish to enjoy civilization, or what you’re legally obligated to pay (taxes, water/sewer, utilities)
- Planning for future purchases: boats, homes, braces for your kids, etc.
- Long-term savings
To keep it all running smoothly and to meet your life goals, you have to know where each dollar is going. Or else, you could end up getting the electricity turned off.
3. Get You Back on Your Feet Following Missteps
The key to staying on budget is to understand failure is part of it. You must have a contingency for when that happens, because it will.
Using an expense tracker motivates you to do better. But to get the most out of it, find one that’s easily accessible and incorporates with the cloud.
This Tiller Money review highlights a budgeting tool that links to Google Docs, so you can work with one of the most widely supported systems you’re probably already using. Other worthwhile trackers include Personal Capital and Mint.
4. Make April Easier
Tax season is the most stressful time of the year. But it’s much worse if you wait until the last minute to locate and add up a year’s worth of receipts.
Using a tracking tool to do it eases the pressure. Most of the good ones allow you to log receipts as you get them (with images), categorize in compliance with IRS reporting regulations, and easily retrieve the necessary numbers when you need them.
5. Detect Fraud
If you bank online, then you have sensitive data on your email accounts. If your email account is set up through Yahoo, then you’ve been compromised at some point.
To what extent, who knows? The important thing is being aware of it and taking appropriate action.
An expense tracker will bring awareness to fraudulent activity. It also will enable you to act before too much damage occurs.
After Your Expense Tracker Is in Place
Once you’ve got a tracker you can trust, we encourage you to take positive actions with your budget. You can start by making these 10 healthy money-saving choices.
In the meantime, which of these budgeting tools do you use, and why do you prefer it? Drop us a line in the comments section.