Can writing down daily expenses improve your money management skills?

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Tracking down expenses on a regular basis is an underrated practice. It is an essential activity that can  monitor your daily spending and track the minor and unnoticed expenses that slip through.

While we do have many expense tracking apps, an individual can simply use an Excel sheet to jot down expenses on an every day basis. At the end of the month, you’ll be able to identify exactly where the major chunk of your earnings go. Writing down expenses also help you identify a consistent spending pattern on a monthly basis.

In a recent episode of Money9 Helpline, a person raised a similar query.

“My wife lost her job last year, hence I am the sole earner for my family. Our family income is Rs 45,000 while we spend Rs 40,000 per month. Will writing down daily expenses help in managing my expenses better?” asked Ashoke Mukherjee from Kolkata.

The right balance

Even bachelors face similar problems while trying to maintain a balance between their earnings, expenses and savings.

“I earn Rs 30,000 every month. I don’t have to pay for the ration and neither the house rent since I live with my family. Still, I am nearly at the edge of spending my last few hundreds by the middle of every month. I don’t understand where my money flies,” complained Shubham Mishra, an advertisement professional from Noida.

This is where the importance of writing down your daily expense resurfaces. It might be a laboring process but definitely helps you in the longer run.

Expert view

“Writing down your monthly budget is extremely helpful to plan your finances ahead and understand your mistakes as well. There are a lot of digital apps available today that can help you better track your monthly expenses. If not these, simply jot down every day expenses in an excel sheet. This will help you in understanding your unnecessary expenditure which can be avoided,” Viral Bhatt, founder of  Money Mantra said.

Inculcating the habit of noting down every day expenses can also help smoothen your personal finance and investment management journey in the future, Bhatt added.

So now, especially during the Covid-29 pandemic, if you want to increase your savings or investments, take a closer look at your monthly expenditure and cut down on whatever you feel is unnecessary.