5 reasons you should track your spending

Keeping track of your spending helps you save more money. It’s also good for your health.

close up view of woman holding bills with glasses and a calculator on the table

Updated on March 18, 2024.

No matter your income level, it’s good to have a monthly budget. A budget is a plan for saving and spending money. It helps you keep track of your income (the money you make). It also helps you remember your expenses (the money you spend). This can help you save money over time.  

Worrying about money all the time can make you feel stressed. This stress can cause health problems. But tracking your spending can lower your stress. In this way, it can benefit your health. 

Here are five reasons why tracking your spending is a good idea. 

It will help you see spending patterns 

Many people spend money without thinking about it. They might not remember all the small purchases they make. (A purchase is something that you buy.) For example, if you buy a pack of gum for $2 every day, that will add up to $730 after a year.  

When you keep track of things you buy, you learn more about your spending and saving habits. That lets you make better decisions about what you should or should not buy. You might decide that you don’t really need to buy things like gum. Then you can save that money for more important things. 

It will help you balance your spending 

Having a budget means you look at all the money you have to spend. Then you decide to spend money on certain things.  

Many budgets have categories for things you spend money on. These might include food, clothes, housing, and fun things like entertainment.  

If you spend too much in one category, like entertainment, you will have less money to spend on other things. Your budget will let you know. This can help you divide your money more evenly among the things you need to pay for. This can also help you avoid spending too much on certain things. 

It will help you achieve financial goals 

It’s a good idea to have financial goals. That might mean saving up money to buy something expensive, like a car. It might mean paying off debt, like from a credit card.  

You can include these types of savings goals into your budget. That way you can set aside some money to pay for the things you need to buy every day. You can also save some money for bigger needs.  

One way to help you save money for the future is to open a savings account at a bank. This could be at a bank in your neighborhood or on the internet. As much as you can, put a little money into the savings account each month. Over time, it can add up. 

It will help you spot fraud 

Fraud is when someone tries to steal your money by tricking you. One way that people might try to steal your money is through identity theft. This means that someone pretends to be you. They do this to get into your bank account or credit card to buy things.   

Each month, look carefully at your credit card statement or bank statement. (A credit card statement is a list of purchases you made that your credit card company sends you. A bank statement is a list of the amounts of money that went into your bank account or that came out of it.)  

When you look at your statements, you can see if there are any purchases you didn’t make. If you see one, let the credit card company or bank know that someone else is using your account to buy things. 

It will make you healthier 

When people don’t have enough money, it can cause stress. Having a lot of stress over a long period of time can be bad for your health. For example, it can raise your risk for certain diseases, like heart disease.  

When you keep a monthly budget and keep track of your spending, you can lower this kind of stress. That will help keep your mind and body healthy. 

How to start tracking your spending 

There are lots of ways to keep track of your money: 

  • You can do it using a simple notebook. Write down all the money you make and all the money you spend.  
  • You can also use a spreadsheet on a computer. A spreadsheet is a computer program that lets you organize numbers.  
  • There are also lots of smartphone apps that do the work for you. You just enter the amounts of money you make and spend.  

The most important thing is to choose a way to track your money that you understand. That way, it will be easier to turn it into a habit.  

Once you have chosen a way to track your money, pick your categories to track each month. These might include food, rent, clothing, transportation, and fun things like going to the movies. Be sure to include a category for savings, too. 

If you have a family or a partner, you should discuss these categories with them. Everyone should agree on how much there is to spend in each category during the month. You don’t want family members spending more money than you have on any category. 

Once you have these things in place, it’s time to start tracking your money—and saving for the future. 

Article sources open article sources

American Psychological Association. Stress effects on the body. November 1, 2018. Accessed April 8, 2022.
Mayo Clinic. Stress symptoms: Effects on your body and behavior. March 24, 2021. Accessed April 8, 2022.
Mind.org (UK). The link between money and mental health. August 2021. Accessed April 8, 2022.

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