By Sabrina Karl
There’s no shortage of advice on how to handle your personal finances better. Order one less latte a week. Sit down and make a budget. Pay off that debt. You’ve likely heard them all.
Still, the advice to track what you spend is worth repeating. It’s a powerful practice with many positive benefits. But perhaps the best way to be convinced of its value is to consider the opposite: tracking nothing.
Without monitoring what leaves your bank accounts and adds to your card balances, you’ll be operating in financial darkness. Anything that hits your accounts will simply accumulate to your spending, and at the end of the month, you’ll owe what you owe and your balance will sit where it sits.
But lurking in there may be various financial whammies. For one, if you’re charged more than expected, you’ll never know. Worse, if someone fraudulently buys something with your credit or debit card number, you’ll not only pay for their illegal purchase, you’ll also miss the chance to quickly report the fraud and stop them from making more damaging transactions.
Additionally, many households have numerous automated charges set up, such as subscriptions for TV programming, online software, memberships, etc. If you no longer use a service, it can be easy to forget. Yet the fee will show up religiously every month, whether you notice it or not.
Without tracking, you’ll simply lack knowledge about how much you’re spending on what. This can affect how you decide on new purchases, as a lack of accountability makes impulse purchases easier to justify.
In contrast, carefully watching your expenses puts you in the driver’s seat, empowering you with a sense of control and the ability to find expenses you can reduce or eliminate, or report if you aren’t the one who made them.