Have you ever wondered where your money goes each time it leaves your hands?
Or maybe you’re perplexed at how difficult it seems to maintain a budget or grow your savings. The answer may actually lie on your expenses – what they are, how much and why.
Here are reasons why we all need to record our expenses for better money management:
- Monitor daily, weekly, monthly or annual expenses
Recording expenses makes it easier to determine how much we spend within a given time period. We can then compare the figures with resources such as salaries, bonuses and other sources of income to determine if the spending was indeed reasonable. If it isn’t, then it would be easier to control similar purchases in the future.
- Tax purposes
Itemized deductions on tax returns require accurate recording of expenses. Come audit time, it’ll be easier to know exactly which receipts to present and why the items concerned should exempt us from paying taxes.
- Separate the necessity from the luxury
Whether we admit it or not, we buy luxury items just because we can, without considering the effects on our finances. This is why we need to record our expenses. By keeping track of where the money goes, we are able to take note of items we buy out of necessity and keep them separate from the items we purchase out of want.
- Keep track of investments
Another important financial aspect we need to take control of is our investment. Need to know what your purchases give back to you? Recording all expenses helps keep track of all investments made in the past and determine which ones are actually paying back.
- Create and maintain a budget
By recording expenses, it’s easier to control future spending. This, in turn, helps build a more substantial savings.