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5 Surprising Benefits of Tracking Your Spending

5 Surprising Benefits of Tracking Your Spending

Quick: How much money did you make last month? Too easy? Okay…how much money did you spend last month, and on what, exactly?

If you’re struggling to answer that one, you’re in good company. According to a poll from Gallup, two-thirds of Americans do not track their monthly spending. This blind spot may seem benign, but it’s often to blame for problems like snowballing credit-card debt, family fights, daily stress, and anxiety about the future.

The solution might be easier than you think: taking a few minutes each day to monitor and think about where your money is going can improve your life in dramatic ways. Tiller Money recently announced the results of a survey that asked 100 people, all spreadsheet users, about what they’ve gained from tracking their finances for at least 3 months.

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1. 93% Agree – You’ll Have Better Insight into Your Spending Habits

Most of us have only a vague idea of where our money goes each month. But look around: Are you surrounded by overflowing closets, fitness devices gathering dust, and cosmetics spilling out of bathroom drawers? These are a result of your spending decisions.

In an era of one-click purchasing and automatic billing, it’s easier than ever to spend mindlessly: while we’re at work, eating dinner, sitting on the couch, or even sleeping. But when you pay attention to each and every outlay of cash – just a few minutes a day is all it takes – you’ll see trends, identify waste, and notice expenses that are misaligned with your values and priorities. Before long, you’ll find yourself questioning your spending decisions before you hand over your credit card.

2. 80% Agree – You’ll Have a Better Relationship with Your Spouse or Partner

Money is the leading cause of relationship stress, according to a survey by SunTrust Bank. Not kids, affairs, or household chores – money! It’s only natural that you and your partner will have different approaches to spending and saving, but this doesn’t mean finances have to cause friction. Eliminating this particular stressor demands open, transparent communication about money. Take the time to sit down with your partner and agree on savings goals. Then look back on your spending decisions together, without judgement or recrimination. This will force you to have a healthy discourse about your respective priorities and make compromises as a team.

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3. 79% Agree – You’ll Spend Less Impulsively

We all spend impulsively from time to time — that’s not a bad thing. But making frequent or large or purchases on impulse — “What a cute car! I’ll take it!” — can ruin you. So before you make each purchase, pause and ask: “Did I come to the mall looking for a new pair of boots or did they catch my eye as I was walking past the store?” “Do I really think an Apple iWatch will make me more productive, or am I just trying to keep up with my friends?”

You may be spending more impulsively than you realize — and using money that was earmarked for more important uses. No one, regardless of wealth, likes to waste money! Tracking your purchases will force you to acknowledge unconscious spending, and with time, you’ll find yourself naturally spending in ways that don’t leave you feeling guilty later.

4. 81% Agree – You’ll Be More Confident About Reaching Your Financial Goals

We all have goals for the future. Perhaps yours is to retire early, travel around Europe, or take a year off to write a book. But while our goals often depend on money, few of us know exactly how much we’ll need or how much we have to save each month to get there.

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People who track their spending know how much they’re earning, spending, and saving. So when they’re faced with a pay cut or unplanned medical expense, they know what levers to pull to keep saving at the right pace to achieve their goals.

5. 75% Agree – You’ll Feel Less Anxious About Money

Most of us avoid discussing or even thinking about money because it makes us uncomfortable. According to a survey by the American Psychological Association, the vast majority of Americans reported feeling stressed about money during the past month. We feel stressed about bills that are due and things we want to buy for ourselves or others that we can’t afford, and we feel anxious about our future financial security. But burying your head in the sand isn’t the answer. As Tiller’s survey shows, facing your financial fears head-on by owning up to and taking control of your spending is a proven way to reduce anxiety and stress.

If you’re among the majority of Americans who don’t have a process in place for keeping tabs on your cash flow, take a few minutes each day to adopt this powerful new habit. There are many, many tools out there that make it quick, easy, and yes – even fun. You can use a slick app with pre-built reports like Mint or YNAB, or create your own custom dashboard with Tiller, which lets you link your bank accounts to Google Sheets.

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Featured photo credit: alejandroescamilla.com via hd.unsplash.com

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Sharen Ross

Marketing Strategy Consultant

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Last Updated on March 4, 2019

How to Use Credit Cards While Staying Out of Debt

How to Use Credit Cards While Staying Out of Debt

Many people will suggest that the best thing to do with your credit cards during these tough economic times is to cut them up with a pair of scissors. Indeed, if you are already in huge debt, you probably should stop using them and begin a payback strategy immediately. However, if you are not currently in trouble with your credit cards, there are wise ways to use them.

I happen to really love my credit cards so I will share with you my approach to how I use mine without getting into deep financial trouble.

Ever since about 1983 when I got my first Visa card, I continue to charge as many of my purchases as possible on credit. Everything from gas, groceries and monthly payments for services like my cable and home security monitoring are charged on credit. Despite my heavy usage, I have maintained the joy of never paying any interest fees at all on any of my credit cards.

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Here are some tips on how best to use your credit cards without falling into the trap of paying those nasty double-digit interest fees.

Do Not Treat Credit Cards as Your Funding Sources

Too many people treat their credit cards as funding sources for major purchases. Do not do this if you want to stay out of trouble. I use my credit cards as convenient financial instruments so I do not have to carry around much cash. In fact, I hate carrying cash, especially coins. When you buy things on credit, the purchases are clean and you will not get annoying coins back as change.

I do not rely on my Visa, MasterCard or American Express to fund any of my purchases, large or small. This brings me to my golden rule when it comes to whether I will pull out any of my credit cards either at a retail or online store.

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I never purchase anything with my credit cards if I do not have the actual cash on hand in my bank account.

If I really cannot pay for the item or service with cash that I already have at the bank, then I simply will not make the purchase. Remember, my credit cards are not used as funding sources. They are just convenient alternatives to actual cash in my pocket.

Make Sure to Always Pay Off Balances in Full Each Month

The next very important part of my overall strategy is to make absolutely sure that I pay the balances in full each and every month no matter how large they are. This should never be a problem if the cash has been budgeted for my purchases and secured in the bank. I have always paid my full balances each month ever since my very first credit card and this is why I never pay interest charges.

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Using Credit Cards with Rewards

Most of my credit cards are of the “no annual fees” type, including one MasterCard on a separate account I keep at home as a spare in case I lose my wallet or incur any fraudulent charges. However, I do use a main Visa card which does have an annual fee because all purchases on that card reward me with airline frequent flyer points. For me, the annual fee is worth it since I do travel and I get enough points to redeem many free flights.

You have to decide for yourself if you will charge enough purchases on credit each year without paying interest charges to warrant a credit card that rewards you with airline points (or other rewards). In my case, the answer is “yes” but that might not be the case for you.

I occasionally use a MasterCard or American Express card on small purchases just to keep those accounts active. Also, I have been to the odd retailer that accepted only a certain type of credit card, so I find that having one from each major company is quite handy. Aside from my main Visa card which earns the airline points, the rest of my cards are of the “no annual fees” variety.

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So this is how I use my credit cards without getting into any financial trouble with them. This strategy is recommended only if you are not in debt, of course. In fact, it is worth keeping in mind once you’re out of debt so that you can keep your credit cards active and treat them responsibly.

What are your credit card usage strategies? Let me know in the comments — I’d love to hear what methods you use.

Featured photo credit: Artem Bali via unsplash.com

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