My clients and the coaches I train know that I feel very strongly about tracking your spending. This is for many, many reasons. But I want to talk here about how tracking influences “impulse” spending.
If you start tracking your spending, after a while you’ll probably be in for some surprises. I’ll bet you didn’t know how much those morning lattes were adding up to week after week. Tracking your expenses will help you identify the small expenditures that can add up to big money over the course of a year. Using the information you get from tracking, you can evaluate what effect those expenditures are having on your overall financial condition, and whether or not you could be using that money in more meaningful ways.
I always had my clients create a list of their most common impulse buys. I would ask them to evaluate whether or not they’re worth the cost, financial or otherwise. The point is that tracking your money helps you build awareness about your spending choices.
Most people find that after they’ve spent time tracking their spending, they start to spend less. One of my clients once told me, “I wanted to buy it, but the thought of having to write it down stopped me.” If it’s not worth writing down, it’s probably not worth buying.
Do any of your weekly impulse purchases change the quality of your life? I don’t mean to imply that you’ll never want to spend money on a book, greeting card, or flowers. But are you buying things you don’t need? Cards you never send? If the answer is yes, then you might want to take a closer look at this kind of spending. Curbing your impulse spending can give you significant additional money for saving or investing.
It’s been said that you may not make your first million by tracking your spending, but you won’t keep your first million without tracking where your money goes!