Why is it important to keep track of your expenses efficiently?

Jul 6, 2021
Why is it important to keep track of your expenses efficiently?

What is an expense and why efficiently tracking your expenses is so important?

An expense is considered to be the amount of money that goes through three important stages, it starts from revenue, income statement, and finishes at net income.

Tracking every spending sounds to be a boring and insignificant task for some people. But why it is so important to be aware of your money and why you should efficiently track your expenses.

Tracking your expenses requires monitoring your monthly spending. Expense management regularly can help you better control your money and improve your financial habits. An invoicing tool is essential for your business as it helps you to invoice your clients and to get funded.

There are a lot of benefits that expenses tracking brings to you and your business. Therefore, in this article are outlined several reasons why to keep track of your expenditures and how important is invoicing management in your business.

Control your finances

Being out of financial control is one of the worst feelings that you could have. But when you record every financial transaction you make you easily control anything and everything involving your money. Also, if you are a digital nomad, tracking your expenses helps you stay on track with your finances. There are different ways to track your money. Excel sheets are the most commonly used, but if you think they are boring, you could use existent applications for tracking your expenses and invoices.

Keep your finances organized

Disorganized finances lead to financial problems. Keeping your finances organized helps you meet your financial goals and expectations. Storing and tracking your finances makes it simple to locate any of the bills and other financial data.

Improve your financial security

Without monitoring your bank account and entering your expenses into a budget, you put your financial security at risk. When you track your finances every day, you can immediately identify any fraudulent transaction.

The clarity in real-time invoice processing

Non-automated invoice tracking is fragmented, time-consuming, expensive, error-prone. The benefit of automated invoice tools allows you to see real-time data and gives you a better understanding of invoice quantities, status, and process bottlenecks. If you are a digital nomad, you could enjoy invoicing platforms, which are free, without hidden fees, and comfortable to use.

Generally speaking, efficiently keep track of your expenses helps you to have financial control over your finances. It secures your money and reduces your financial stress. You become a guru of your money management.

Tools to use for expense-tracking.

Now, if we are aware of the importance of expense tracking, the next step is to start to do it. Therefore, we suggest to you several steps follow in your journey of expense tracking.

Plan your budget

Planning your budget is the first step in better expense management. At the beginning of each month, it is recommended to plan your money, to list your overall expenses, and your income. Moreover, it is useful to categorize your expenses by the types of expenses you usually do. You could divide them into as many “columns” as you wish, but you could start with three groups. Planning is crucial, it could reveal the unnecessary spendings that you are doing monthly, and also, could alert you in case of any forgotten invoices that you have to pay, or other things you have to spend money on. Planning your budget helps to improve spendings habits.

Record your expenses

Recording expenses, means you need to record every cent, every expense. The reasons behind this are that it will help you to save money, to understand how you can make savings, and how you could spend less. Regularly checking your bank account, credit, and bank statements are highly recommended. Nowadays, banks offer their customers online applications for better money management. These applications record each of your card transactions, helping you to understand when you spend your money. Also, they calculate the total income and expenses monthly.

Track your expenses

Now, the most interesting part. The tools you could use for expense tracking. The most known one, the “ancient” one, is paper and pencil. Of course, you are free to choose what to use, if paper and pencil are the best options for you, track your expenses this way. But, you also could use the note application from your smartphone.

Spreadsheets are in use for quite a long time, already. There are several benefits of using a spreadsheet, you could customize it, and provide some useful calculations. It somehow automates the tracking process. 

Apps, the modern way of tracking your expenses. It automates almost the whole process. The first step you should take is to research the software expense management tools and to find out which one fits best for you. An interesting feature that online budgeting apps have, is that these applications work as reminders too. Just imagine how useful it could be to alert you when any of your invoices is near to the due date, and still not paid.

In order to help you, below is the list of several applications you could start with.

  • QuickBooks. This application is considered to be a good one for small business owners.
  • Goodbudget. This one is recommended for beginners.
  • Freshbooks. Another good application for invoicing and expense tracking.
  • Oklyx is the platform that can help you keep track of your expenses and invoices in a single place. Also, it is a free app.

Even if keep tracking your expenses, does not sound interesting to you at first, and seems to be boring, once you start to do it, after 80 days, you will do it by default. You will be amazed at how simple it is, and how many benefits you will discover for yourself.