Checking where the Money is Going

One of the things which I have learned wholeheartedly from my father is to track every penny of the money earned as well as every penny of the money spent. This is very much needed for financial stability to know where exactly your money is spent.

We all can earn money and thus few of us are lucky that we can earn money from multiple sources, but if we don't keep track of that we might spend everything and thus nothing is left for us to save. The formula which everyone should know that Income - Savings = Your Expense. This means that we should first save from the income and thus whatever is left will go to expenditure.

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That is ok because we all keep money aside for savings, but until and unless we don't know if where the expense money is going it's very hard to increase the saving percentage.

Let's say for example you are earning $100 and thus you are saving $10 of it, and you don't know where exactly the $90 is going, then it's very tough for you to increase your savings from $10 to even $15. I am not saying you to cut down your expense, I am just saying that it's very much needed for us to track down where the money is spent because of tomorrow if we need to spend on some extra things we should not pull from our savings and thus can cut down some of the expenses to spend on that extra things.

As I said, I have got this habit from my father who used to write every single expense in his diary even today. He has done it for over 30 years and thus I feel that is one of the best ways to keep track of your money so that you know your inflow and outflow very well.

In my opinion its not required you to write down every expense, but you can do a threshold that if the expense is more than $10 say, then you will keep a track of it. In that way you will know what's your major expenses in the month. I use Spending Tracker app to keep a track of all my expense and thus every month end I review my expenses.

Posted Using LeoFinance